Funds building large net short position in canola

CNS Canada — Fund traders are sitting on large net short positions in ICE Futures Canada canola and likely have room to add to those positions, which should keep values under pressure.

While there is no official reporting on fund positions in the ICE Futures Canada market, as there is in the U.S., traders estimate the commodity funds are “holding a decent-sized” net short about 20,000 contracts.

That short position has built up over the past month or so, with the funds estimated to be net long by a similar amount as recently as November.

While the nearby March contract is trading well below a number of key technical moving averages, the market is not yet in oversold territory and any nearby moves higher should encourage additional fund selling from a chart standpoint.

Market participants usually follow the movements in the funds with interest, as it is said that a position of 10,000 contracts or more can independently move the futures.

— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting.