ICE Canada Review: C$ Plunge Underpins Canola
| 2 min read
| By Dwayne Klassen, Resource News International |
| April 27, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Tuesday’s session mainly higher with much of the support linked to the sharp downward plunge in the value of the Canadian dollar, market watchers said.
Brokers noted that testimony by Goldman Sach officials in front of a US Senate Commission Tuesday had market participants bailing out of risky investments including the Canadian dollar. Commodity funds were also seen bailing out of commodities, including CBOT soybeans. The downswing in the value of the Canadian dollar encouraged fresh domestic processor demand to come forward for canola. Commercials also became steady buyers of canola, with some of that interest said to be pricing old sales to Japan as well as fresh business to China and/or Pakistan, traders said. The buying back of previously sold positions by a variety of market participants helped to underpin canola futures as did the absence of significant hedge offers from elevator companies during the day. Producers in western Canada were said to be concentrating on spring fieldwork as well as planting operations instead of marketings, brokers said. The upside in canola was tempered throughout the session by the sharp declines seen in CBOT soybean and soyoil values. Early weakness in canola had also stemmed from the weakness seen in Malaysian palm oil and European rapeseed futures overnight. The gains in canola were also tempered by sentiment that canola area in western Canada will come in well above the record levels projected by Statistics Canada in its first acreage survey released on April 26, brokers said. Statistics Canada pegged 2010 canola area in Canada at a record sized 16.9 million acres. Some pre-report projections had called for seeded area to be in the 17.5 million to 18.0 million acre range. Canola area in Canada during the spring of 2009 totalled 16.199 million acres. Weather outlooks calling for beneficial rain across much of the Canadian prairies over the next few days was also viewed as an undermining price influence on canola. Spreading was a feature of the activity in canola and helped to augment the volume total. There were an estimated 21,282 canola contracts traded Tuesday, down from 22,461 during the previous session. Western barley futures were untraded and unchanged Tuesday. No barley contracts changed hands during the session. On Monday, no barley contracts were traded. |
