ICE Canada Review: Fund Liquidation Undermines Canola
| 2 min read
| By Dwayne Klassen, Commodity News Service Canada |
| February 28, 2011 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Monday’s session on the defensive with much of the bearish price atmosphere encouraged by steady commodity fund liquidation orders, market watchers said. Declines in the outside oilseed markets stimulated some of that selling interest.
Early losses in canola were fueled by the downward price slide experienced by Malaysian palm oil and European rapeseed futures, traders said. The weakness in canola was augmented by the losses displayed by CBOT soybean and soyoil values during the North American day session. The advancing harvest operations in the soybean growing regions of Brazil and Argentina also weighed on canola as did bearish chart signals. A drop off in domestic processor demand, as profit margins for crushers have decline, also was an undermining price influence. The lack of fresh export demand being put on the books also contributed to the easing in canola values, traders said. The continued upswing in the value of the Canadian dollar further undermined canola futures. Light, but steady hedge selling by grain companies in western Canada also weighed on canola futures. Some underlying support in canola came from light commercial demand, believed to be the pricing of old export business. Reports that a Canadian Wheat Board official believes that as much as 5.0 million acres of farmland in western Canada may not be seeded this spring due to the wet conditions, also helped to slow the price drop seen in canola. Spreading was again a feature of the activity in canola and helped to augment the volume total. There were an estimated 12,962 canola contracts traded Monday, down from the 24,599 contracts that changed hands during the previous session. Of the contracts traded, 6,554 were spread related. Western barley futures were untraded Monday with no contracts changing hands.
|
