By Dwayne Klassen, Commodity News Service Canada
Winnipeg – August 23/12 – Canola futures on the ICE Canada trading platform finished on the defensive Thursday after starting the day off on a stronger footing. Much of the downturn in canola came amid the taking of profits and the extension of the declines experienced by CBOT soybean complex values, market watchers said.
Canola had begun Thursday’s session with small advances with spill over buying from Wednesday’s smaller than expected production estimate from Statistics Canada behind the strength, brokers said.
The government agency estimated Canadian canola output at 15.4 million metric tons. This fell below pre-report expectations that ranged from 15.5 million to as high as 17.0 million tons. Canola output in 2011/12 totalled 14.2 million tons.
The early strength in CBOT soybean and soyoil values had also encouraged some of the upward price action in canola. However, when those values began to turn lower the gains in canola also began to be trimmed.
The downturn in canola picked up steam as the taking of profits by market participants also began to increase, brokers said. The triggering of chart-based speculative and commodity fund liquidation orders on the way down, amplified the price declines in canola.
Additional weakness in canola came from the mostly favourable weather conditions for harvest operations on the Canadian prairies. Elevator company hedge selling, tied to an anticipated increase in farmer movement of canola into the cash pipeline amid the progression of harvest activities, also weighed on canola.
The downside in canola was tempered by the easing in the value of the Canadian dollar. Talk of good domestic processor demand, amid improved crush margin profitability, also provided a firm floor under the market, traders said.
The pricing of old export business by commercials helped to underpin canola, as did speculation that fresh Canadian canola business was in the process of being concluded with China. Export sources, however, were unable to confirm that any new sales had been made.
There were an estimated 14,641 canola contracts traded Thursday, up from the 12,830 contracts that changed hands during the previous session.
No milling wheat contracts were traded but values were lowered slightly by ICE Canada. Durum and barley contracts were unchanged and untraded.
Prices are in Canadian dollars per metric ton.
Futures Prices as of May 22, 2013
Prices are in Canadian dollars per metric ton