ICE Canada Review: Canola Up On Oversold Ideas
| 2 min read
| By Dwayne Klassen, Resource News International |
| November 13, 2009 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished the session higher with gains linked to sentiment that the commodity was undervalued and in need of an upward price correction, market watchers said.
Early support in canola had come from the advance seen overnight in Malaysian palm oil and European rapeseed futures. An upturn in CBOT soybean and soyoil futures also had encouraged some of the upward price action seen in canola during the session. Helping to underpin prices was the complete lack of willing sellers in the market, which in turn amplified the price gains, brokers said. Producers in western Canada have generally finished harvest operations and have locked up their canola waiting for higher cash bids to surface before delivering, traders said. Some light chart based buying was also evident which further underpinned canola futures. Some of the strength seen in canola was also linked to the vomitoxin concerns that have surfaced in dried distillers corn in the US and the potential for US soymeal to enter into the US livestock rations as a replacement. The support in canola came from sentiment that Canadian canola meal will work its way into the US to help fill those feed requirements, traders said. Steady domestic crusher demand was evident throughout the session which helped to underpin canola. The pricing of canola export business to locations other than China also offered good support, brokers said. The advances in canola were capped by the uncertainty regarding Canadian canola exports to China and the downturn in most CBOT soybean contracts near the close. Strength in the value of the Canadian dollar was also viewed as an undermining price influence. Some position evening ahead of the weekend was also evident. There were an estimated 5,574 canola contracts traded during Friday’s trade, down from 9,886 during the previous session. Of the contracts traded, 478 were spread related. Western barley futures were steady to fractionally lower in very thin activity. Some light selling in the March future was encouraged by the increased availability of feed grains in western Canada, brokers said. Activity was an extremely light two way commercial affair. Only 1 barley contract changed hands during the session. On Thursday, 45 barley contracts were traded. |
