Canola Breaks Higher With Technical Buying Likely Triggered

GENERAL COMMENTS:

Canola added to this week’s gains with new contract highs set again overnight for both the July and November contracts. A 20% decline in Australian canola production forecast in the June ABARES crop report (with plenty of risk of turning into a greater decline), heavy rainfall in areas of the Canadian Prairies that are already experiencing seeding delays and record high crush margins (exceeding $350/mt above this time last year, or $8/bushel) provided plenty of bullish fundamental support. But the push higher overnight likely was inspired by technical related buying as prices finally broke convincingly over the 2025 high of $751.70/mt. That is the final piece of the puzzle, completing a saucer bottom formation that has been four years in the making. Saucer bottoms are not to be taken lightly and suggest sharply higher prices ahead. As a word of caution, technical objectives are also subject to failure (if something significant changes), so rewarding rallies should remain a goal. In the meantime, soybean oil is testing Monday’s contract highs with the help of strength in energy markets, led by diesel this time. The attacks by Iran and the U.S. increased in number and severity overnight with the trade finding little solace in President Trump’s repeated message that he thinks talks are progressing well. The day’s highs were put in early Wednesday about the time he suggested he expects the blockade on Iran will be lifted by Labor Day. That’s Sept. 7 and provides no comfort to a world that had been told the Strait of Hormuz would be opened April 7 as part of the ceasefire agreement. Significant drone attacks on oil terminals in Russia’s Saint Petersburg area by Ukraine likely added to the buying interest in the energy complex.

OUTSIDE MARKETS:

Treasury markets are lower as inflation fears increase again. From a technical perspective, the rally on all the talk of an imminent deal appears to simply have been a bear market bounce, allowing for profit-taking with the current retreat from 25-day moving averages a bearish sign. It suggests lower prices and higher interest rates to come. With that, the market is pricing in a 41.6% chance of a rate increase by the end of the year, which does suggest a quarter-point hike is priced in for the December Fed meeting. Meanwhile, the U.S. 10-year note is at 4.48% after reaching 4.69% as a recent high.

The U.S. dollar is quietly higher on the developments. The June U.S. dollar is .101 higher at 99.285.

Equity markets are mixed with the Nasdaq setting record highs again.

Energy markets are higher as discussed in the general comments. July crude oil is $2.14/barrel higher at $95.90. July ultra-low sulfur diesel is $.1449/gallon higher at $3.8436.

The June Canadian dollar is down .00110 at $.72225 while the Brazilian real is down .00020 at .19795. June gold is down $28.10 per ounce at $4491.80.

OILSEEDS:

Canola is sharply higher as discussed in the general comments. For more on the ABARES June crop report, see Tuesday’s blog at https://www.dtnpf.com/agriculture/web/ag/blogs/canada-markets/blog-post/2026/06/02/australian-wheat-production-expected. In Manitoba’s crop report released on Tuesday, canola seeding was reported to be approximately 60% complete as of June 2 with heavy storms rolling through parts of the province later in the day being of little help. With additional heavy rain in the forecast for the next week, seeding delays will continue to be an issue. July canola is $16.40 higher at $794.50/mt while Nov canola is $17.10 higher at $798.90/mt.

Palm oil is sharply higher after gapping up on the return to trading following a holiday break. July palm oil is 3.13% higher.  

Soybean oil is sharply higher, trying to test contract highs again thanks to diesel’s advances.

European rapeseed is higher after gapping up overnight. The Australian crop report may have added to the bullish enthusiasm. August rapeseed is 7.25 euros higher at 534.75 euros per mt.

Soybeans are higher with soybean crush margins setting another record high of $4.21/bushel surely helping (compared to a more normal $1.47/bushel to start the year).

WHEAT:

Wheat markets are mixed with early harvest pressure likely helping with the decline to test support at 100-day moving averages despite the poor crop condition ratings in the U.S., the seeding delays in Canada, and word out of Australia that they currently expect wheat production to fall by 26% to 26.7 mmt (23% below the five-year average).

CORN:

Corn is quietly higher as bargain hunting may finally be setting in. To put it in perspective, the sharp selloff since May’s high on the popular seasonal trade of selling once seeding is 50% complete has taken the July contract to a mere $.09/bushel above the harvest contract low set in August. The December contract (despite the expected drop in acres and production) is now only $.20/bushel off of 2026 lows and $.25/bushel off of contract lows while being over $.40/bushel off of the May 13 high.  

Mitch Miller can be reached at mitchmiller.dtn@gmail.com

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