One trading day later than expected, but it appears the Funds have indeed started to sell after the Low Yield confirmation of the latest USDA. Canola down 68c today.
Potential for a Turnaround Tuesday tomorrow, but as predicted last week, the confirmation of poor yields was a great sell signal and a mostly priced in Fed QE3 Announcement was icing on the cake for them to begin to unwind a fairly massive long near the highs of the year.
J-MAS remains Medium-Long term Bullish our own grains as Canola did breach the very important 52-week high barrier and Fundamentals are visibly Bullish for Canola to outperform Beans during this corrective period and springboard as Beans bottom. But it may not be sexy pricing for a few months.
The “Spreads locked out to July” play is also showing its Hedging nature as May/July dropped 4c less than the spot month, the type of daily outperformance we’ll see if things go sour and the Inverted market unwinds (as it eventually should – if not, it means we are headed to $16 Canola).
Demand that was starting to slacken slightly should re-enter the market and in the Long Term, a correction should be positive for maintaining a tight S&D into 2013 as China buys the dip.
If not, that is why we are 55% sold Canola and no less than 40% sold anything but Flax. Remember – Fund sellers now become potential buyers again later, but you need to be sold to a position that keeps you from panicing into one of their traps.
Chickpea Sales should be pushed forward to 100% as you wrap that harvest as well.