ICE Canada Review: Beneficial Rains Undermine Canola
| 2 min read
| By Dwayne Klassen, Resource News International |
| April 29, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Thursday’s session on the defensive after trading at mostly higher levels for the bulk of the day. The liquidation of contracts by a variety of market participants near the close took values down, market watchers said. Only the nearby May and July contract finished with advances.
Some of the selling was believed to be profit-taking as well as linked to the beneficial precipitation that was replenishing dry soil conditions across much of the key growing regions across western Canada, traders said. Weather outlooks calling for the rain to continue over the next day or so also was viewed as bearish for values. Some of the early buying that was also evident in canola was said to have dried up at the close, which helped to weigh on prices. Early support in canola had come from good commercial demand, some of which was pricing old export business to Japan as well as indications that some fresh business was still being put on the books. Export sources were unable to confirm any new canola sales, but speculation continued to circulate around Chinese and Pakistan interest. The slow pace of producer offerings helped to underpin canola futures early in the session as did the buying back of previously sold positions by commodity fund accounts, brokers said. The selling of canola options in favour of canola futures also provided some early upward price momentum. Some of the commodity funds who had been early buyers turned into sellers near the close, brokers said. Bearish sentiment in canola also continued to come from ideas that acreage to the crop will surpass the record size estimate made by Statistics Canada in its first crop acreage survey on April 26 for the 2010 spring planting season. The government agency pegged Canada’s canola area at s record 16.9 million acres. Market participants feel a number in the 17.5 million to 18.0 million acre range will be more accurate. A minor upswing in the value of the Canadian dollar also was an undermining price influence. Spreading was a feature of the activity in canola and helped to bolster the volume total. There were an estimated 16,081 canola contracts traded Thursday, down from 19,816 during the previous session. 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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