ICE Canada Review: Canola Drops On CBOT Soybean Sell-off
| 2 min read
| By Dwayne Klassen, Resource News International |
| March 31, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Wednesday’s session lower with strength in the Canadian dollar and bearish data for US soybeans from the USDA behind the downward price momentum, market watchers said.
The rolling out of the May canola contract and into the July future by large index funds continued to be a feature of the trade in canola. Canola contracts were pushed lower early by the release of the USDA stocks report, which showed larger than anticipated amounts of old crop US soybean supplies, brokers said. The USDA said US soybean stocks as of March 1 totaled 1.270 billion bushels, up from pre-report estimates. Stocks of US soybeans as of December 1 totaled 2.337 billion. Last year at the same time, they were 1.302 billion. The strong Canadian dollar also continued to cause profit margins for Canada’s domestic crushers to lose ground, which in turn cut off demand for canola from that sector, traders said. Speculative based liquidation orders helped to weigh on canola as did sentiment that canola area in western Canada is still on pace to climb significantly this spring despite dryness concerns in parts of Alberta and Saskatchewan, brokers said. Elevator company hedge selling was also evident and helped to undermine canola futures. Scale down commercial demand, said to be covering old export business to Japan, helped to temper the price weakness in canola. The buying back of previously sold positions near the close also helped to take canola off of its lows for the day, traders said. There were an estimated 20,736 canola contracts traded Wednesday, up from 17,898 during the previous session. Of the contracts traded, 14,748 contracts were spread related. Western barley futures were unchanged and untraded in non-existent activity. No barley contracts changed hands during the session. On Tuesday, no barley contracts were traded. |
