ICE Canada Review: Canola Up On Weak C$, Short-Covering
| 2 min read
| By Dwayne Klassen, Resource News International |
| April 16, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Friday’s session mainly higher with strong support throughout the day coming from the significant pull-back in the value of the Canadian dollar, market watchers said. The depreciation of the Canadian currency was said to have stimulated fresh demand for the commodity.
Extremely heavy volumes of trade were seen in canola during the day with spreading the key feature. Speculative fund accounts were aggressively bailing out of the nearby May future and into the July contract. The weakness in the Canadian dollar sparked aggressive buying by domestic processors, with profit margins for crushers moving to the highest level in the past month and a half during the day, brokers said. The pricing of old export business to Japan and Mexico by commercials was also evident and contributed to the strength displayed by canola. A drop off in the level of hedge selling by elevator companies also provided good support. The decline in hedges was linked to sentiment that producers were starting to concentrate on spring fieldwork and planting instead of marketing activities. The buying back of previously sold positions by a variety of market participants was also a feature of the trade and helped to bolster canola futures, traders said. Some minor psychological support in canola also came from concerns about the impact ash, that is spewing from a volcano beneath Iceland’s Eyjafjallajokull glacier, would have on global agriculture, brokers said. The high-altitude ash cloud forced aviation authorities in Britain and other parts of northern Europe to ground thousands of flights Thursday as well as Friday. The upside in canola was limited by the record level of acres that will be planted to the crop this spring and by the improved soil moisture conditions seen in western Canada, traders said. The record large global oilseed supply situation was also an undermining price influence. The declines in CBOT soyoil and the mixed close in CBOT soybeans also restricted the price gains in canola. There were an estimated 38,984 canola contracts traded Friday, up from 19,904 during the previous session. Of the contracts traded, 29,138 contracts were spread related. Western barley futures were mainly steady although the nearby May future was offered lower on the close. No barley contracts changed hands during the session. On Thursday, no barley contracts were traded. |
