|By Phil Franz-Warkentin, Commodity News Service Canada|
|Sept. 26, 2012|
|Winnipeg – ICE Futures Canada canola contracts closed sharply lower on Wednesday, as heavy fund long liquidation saw prices drop well below their former support levels.
Losses in the CBOT soy complex provided the catalyst for the heavy fund selling in canola, with a move below chart support triggering some additional stops along the way, according to participants who noted that fund traders were holding very large long positions in canola.
A general sense of risk aversion in the outside financial markets, the advancing US soybean harvest, and improving South American weather conditions added to the bearish tone in canola, said traders.
However, scale-down commercial pricing did provide some underlying support, as end users remain concerned that Canadian supplies may not be enough to meet the projected demand this year. Basis levels were said to be improving in western Canada, as exporters and domestic processors look to encourage more farmer sales.
The weaker Canadian dollar, which was down by about half a cent relative to its US counterpart, also helped slow the declines in canola.
About 22,635 canola contracts were traded on Wednesday, which compares with Tuesday when 11,986 contracts changed hands. Spreading accounted for about 8,148 of the contracts traded.
Milling wheat futures were untraded, but revised lower after the close. Durum and barley futures were untraded and unchanged.
Settlement prices are in Canadian dollars per metric ton.Price Change
Canola Nov 595.10 dn 13.70
Jan 598.50 dn 13.60
Mar 597.50 dn 14.40
Milling Wheat Oct 295.50 dn 3.10
Dec 300.70 dn 3.10
Durum Oct 311.90 unch
Dec 316.40 unch
Barley Oct 250.30 unch
Dec 255.30 unch
Futures Prices as of May 21, 2013
Prices are in Canadian dollars per metric ton