ICE Canada Review: Soybean Sell-Off Undermines Canola
| 1 min read
| By Dwayne Klassen, Resource News International |
| May 6, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Thursday’s session on the defensive after trading at higher levels for the bulk of the day. The late downward price action in canola came as the losses in CBOT soybean futures accelerated at the close, market watchers said.
Activity was described as extremely volatile with the realigning of spreads an early feature of the trade, brokers said. Weakness in the Canadian dollar provided some of the early strength seen in canola with the pull-back in the value of the Canadian currency sparking fresh demand from domestic processors, traders said. The pricing of old export business to Japan by commercials was also encouraged. Some of the early support in canola also came from the buying back of previously sold positions by commodity fund accounts, brokers said. Weakness in canola had been tied to the improved soil moisture conditions across the Canadian prairies and to the record large oilseed crops being planted in Canada and the US. Losses in CBOT soyoil and soybeans had also influenced some selling in canola, but when the declines in soybeans began to amplify, the selling in canola also picked up, traders said. Steady, but light elevator company hedge selling was also evident throughout the day, helping to limit the upside. Late day profit-taking was also evident and contributed to the price weakness in canola. The inability of canola to penetrate technical resistance was also an undermining price influence. There were an estimated 17,145 canola contracts traded Thursday, up from 13,006 during the previous session. Of the contracts traded, 10,944 consisted of spreads. Western barley futures were untraded and unchanged Thursday. No barley contracts changed hands during the session. On Wednesday, no barley contracts were traded.
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