ICE Canada Review: Canola Weakens On CBOT Soyoil Drop
| 2 min read
| By Dwayne Klassen, Resource News International |
| April 28, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Wednesday’s session on the defensive with the lack of follow-through buying from the upward price action seen early in the day and the declines in CBOT soyoil behind the downward price slide, market watchers said.
Canola had found good support early in the day from good commercial demand. Some of the commercial interest was the pricing of old export business to Japan, but was also said to be covering fresh export business to Bangladesh, traders said. The buying back of previously sold positions by commodity fund accounts had also influenced some of the early price advances. Some chart related buying had also encouraged some support in canola. The upward price momentum that had been evident in canola began to run out of steam as the day progressed, brokers said. Funds, who had been early buyers, turned into net sellers by the close, they said. The commercial demand that had also surfaced also began to wane which allowed canola values to edge towards the minus side of the market. There were ideas that much of the fresh export business had been covered, although export sources were unable to make confirmation of any new sales. Hedge selling by grain companies, which had been light in the early part of the day, also began to pick up as the session progressed, putting additional downward pressure on canola futures, traders said. The arrival of much needed precipitation across the province of Alberta contributed to the bearish price atmosphere in canola. The precipitation was seen moving eastward across the rest of the Canadian prairies over the next few days, providing much needed moisture. Sentiment that producers in western Canada will seed more canola that the record 16.9 million acres projected in the Statistics Canada acreage report on April 26, also influenced some of the downward price action, brokers said. Canola area in Canada during the spring of 2009 totaled 16.199 million acres. Spreading was a feature of the activity in canola and helped to augment the volume total. There were an estimated 19,816 canola contracts traded Wednesday, down from 21,282 during the previous session. Western barley futures were untraded and unchanged Wednesday. No barley contracts changed hands during the session. On Tuesday, no barley contracts were traded. |
