By Dwayne Klassen, Commodity News Service Canada
February 5, 2013
WINNIPEG – Canola contracts on the ICE Futures Canada platform were trading at higher price levels at 10:46 CST Tuesday morning with steady demand from the commercial sector and concerns about tight supplies providing the upward price momentum, market watchers said.
Statistics Canada released a grain stocks in all positions report early Tuesday with the projections for canola falling on the tighter than anticipated side of the coin, brokers said.
Market participants kept a close watch on the canola data with December 31 stocks pegged by the government agency at 7.371 million tonnes. This figure was at the low end of pre-report expectations. Canola stocks on farm and in commercial position at the same time a year ago totalled 9.686 million tonnes. The estimate suggests that the current pace of usage is unsustainable and that some serious rationing of demand will need to take place, brokers said.
Much of the commercial demand continued to come from domestic processors as well as export outlets, traders said.
Chart-based speculative and commodity fund buying was also evident and helped to encourage the upward price action.
The upside in canola was being restricted by the losses seen in CBOT soybean and soyoil futures. The taking of profits by a variety of market participants also tempered the upward price climb in canola.
Elevator company hedge selling, tied to farmer deliveries of canola, further capped the upside price potential.
Spreading was a feature of the activity in canola and accounted for a significant portion of the volume total.
As of 10:46 CST, about 14,863 canola contracts had traded. Of those contracts, spreading accounted for 12,808 of the trades.
Milling wheat, durum and barley contracts were unchanged and untraded.
Prices in Canadian dollars per metric ton at 10:46 CST:
Futures Prices as of December 6, 2013
Prices are in Canadian dollars per metric ton