ICE Canada Review: Commercial Spreading Dominates Canola
| 1 min read
| By Dwayne Klassen, Resource News International |
| February 24, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform ended Wednesday’s session mixed with the four nearby months lower and the deferred contracts mostly higher. Chart-based speculative liquidation prompted much of the downward price action with an upward rebound in the value of the Canadian dollar also an undermining price influence, market watchers said.
Much of the activity in canola consisted of commercial accounts rolling out of the nearby March contract and into the May future via the use of spreads, traders said. Early declines in canola were facilitated by the losses seen in Malaysian palm oil futures. A drop off in export demand along with the large on-farm supply of canola in western Canada helped to weigh on prices. Losses were also being linked to the record large soybean crops that were about to be harvested in Brazil and Argentina. Some of the early losses in canola also reflected the downward price slide that was experienced by CBOT soybean futures, brokers said. However, when soybeans staged a rally just ahead of the close, the losses in canola were tempered somewhat, they said. Support in both old and new crop canola contracts came from steady domestic crusher demand. Traders said processors, in an effort to encourage producer deliveries up their driveway, have resorted to narrowing in basis levels. There were an estimated 13,660 canola contracts traded Wednesday, down from 22,289 during the previous session. Of the contracts traded, 9,520 contracts were spread related. Western barley futures were steady to lower with a drop off in end-user demand allowing light commercial offerings to push values down, brokers said. There were 78 barley contracts that changed hands during the session. On Tuesday, 20 barley contracts were traded |
