Canola: Feb13($11.99) Jul10($12.23) Oct27($11.32)
#2Pea: Feb $8.05 Aug 6.70
#2GrL: Feb 23.0c
FdWht: Aug $5.00
#2AD: Sep $6.57
#2HRS: Sep $6.67
$538 marks an extremely important level. Other resistance levels are important sell points but a 38.2% Fib Retracement level is doubly important. Where normal resistance is a great sell point because it has the potential to mark a top or if broken to the upside, will often act as support and a position can be re-taken on the test of that support with only pennies difference from the previous sell.
But with a Fibonacci resistance level, especially the 38.2% mark, a failure to break through doesn’t just mark a top, it also reaffirms the previous downtrend the market is in and sets up for a leg lower. Where a normal resistance failure likely means a re-test of the lows with a good chance of holding them, a 38.2% failure likely means a new price coming that is substantially lower than the previous lows. See chart below for details on how this particular Fib Retracement was calculated.
In our current market, I believe the Fundamentals have improved enough that the low is in; for this reason I believe that the 38.2% level will be breached and thus $538 will be taken out and a steady move to $560 is very realistic. That is what I believe but until $538 is taken out and confirmed over a 2-3 day period, then we remain in a downtrend. The market will tell us by breaking through $538 that we can more than just believe that $560 is in play, and that even more importantly, a bottom is in.
Watch this level closely: if we breach the level, we can start thinking of $560 Canola ($12.30) but a failure here likely means we go to $480 ($10.60) and whatever we believed about the Fundamentals was false. If the new weather driven Fundamentals are valid, and I believe they are, then the market will tell us that and will take out $538. Price Action is your friend and will tell you what’s important.
A significant rally in Canola will drive an Acre Battle that will be Bullish for all crops we grow.
$$LentilMPU – Take 22-23c #2 or 25-27 #1 on 20% to be 100% sold (27bu of 27bu). Benchmark 80% sold. At Current 22.5c be 100+% sold. Best pin hopes on NewCrop.
There are just too many unsold operations out there that any rally will be met with big sales and more likely, it’s that “no rally” will be met with big sales.
Had I been been subscribing to the Kostal reports back at harvest I would have had at least had one like-minded opinion and the conviction to sell 100% off the combine near 30c for #2’s rather than just the 80% we did.
Many brokers and analysts did a major disservice to Lentil producers last fall as you could nott find 3 people in the industry Bearish what at the time was an obviously Bearish market. Losses are in the 100’s of dollars per acre on those “Hold” recommendations unless some type of general market rally is able to scare up a 25-27c #2 Large Green bid in the next 6 weeks.