ICE Canada Review: Large stocks undermine canola
| 2 min read
| By Dwayne Klassen, Resource News International |
| September 10, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Friday’s session on the defensive although values managed to climb off their lows near the close. Weakness throughout the day was associated with the huge surplus of old crop canola that needs to be absorbed by the domestic and export sectors, market watchers said. Some late support in canola came from the buying back of previously sold positions.
Market participants also had to digest the USDA supply/demand balance sheets released early Friday morning with some evening up of positions ahead of the weekend a feature. Canola contracts traded at lower levels for much of the day before finding some support ahead of the close. The early weakness in canola was tied to the 2.12 million metric ton 2009/10 (Aug/Jul) ending stocks forecast by Statistics Canada on Wednesday, the second highest carryover level on record. The absence of fresh export demand and only scale-down domestic processor demand helped to fuel some of the price declines seen in canola, traders said. Elevator company hedge selling ahead of the weekend added to the bearish price sentiment in canola as did confirmation of a record sized US soybean crop, brokers said. Weakness in CBOT soybean futures contributed to the losses seen in canola. However, ongoing rain related harvest delays and the increased chances of a frost hitting unharvested canola across the Canadian prairies provided some good support, traders said. The buying back of previously sold positions by a variety of market players ahead of the close also helped to push some contracts to the plus side of the market before values again turned lower. Strength in CBOT soyoil futures were also seen as supportive for canola. Spreading was a feature of the activity and helped to augment the volume total. There were an estimated 20,123 canola contracts traded Friday, down from the 20,233 contracts that changed hands during the previous session. Of the canola contracts traded, 8,298 were spread related. Western barley futures were unchanged and untraded Friday. On Thursday, there were 10 western barley contracts that changed hands. |
