ICE Canada Review: Canola drops on large crop prospects
| 1 min read
| By Dwayne Klassen, Resource News International |
| August 20, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Friday’s session with significant losses as aggressive selling was triggered by the larger than anticipated crop production prospects and by steady selling of canola off the combine and into the cash pipeline, market watchers said.
Statistics Canada in its first crop production outlook for the 2010/11 (Aug/Jul) crop year pegged canola output at 10.867 million metric tons, which was at the high end of pre-report estimates that ranged from 10.30 million to 10.91 million tons. In 2009/10, Canadian canola production was 11.825 million. There were ideas that with the survey, which was taken three to four weeks ago, and the good growing conditions since, that canola output will easily surpass the 11.0 million ton level, brokers said. The report sparked a wave of liquidation orders from speculative and commercial accounts, traders said. Declining crush margin values caused domestic processors to back away from the canola market with the absence of fresh export demand also adding to the bearish price sentiment, brokers said. Some chart-based liquidation selling was also evident during the day and added to the price weakness. Declines in CBOT soybean and soyoil values contributed to the bearish price action seen in canola. The downward price slide in canola was slowed in part by the pull-back in the value of the Canadian dollar and by scale down pricing of old export business to Japan. Spreading was a feature of the activity and helped to augment the volume total. There were an estimated 26,001 canola contracts traded Friday, up from the 14,235 contracts that changed hands during the previous session. Western barley futures were bid higher with no western barley futures traded on Friday. On Thursday, no barley contracts changed hands. |
