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ICE Canada Review: Hedges Limit Canola Gains

| 2 min read

By Dwayne Klassen

By Dwayne Klassen, Resource News International

February 9, 2010

Winnipeg – Canola contracts on the ICE Futures Canada platform finished Tuesday’s session mixed with the three nearby contracts up and the remainder lower. Much of the upward price action in the nearby months was linked to the strength displayed by CBOT soyoil contracts, market watchers said. Gains in the Canadian dollar and some line company hedge selling limited the advances seen in canola.

Good volumes were once again posted in canola Tuesday given that commodity fund accounts continued to roll positions out of the nearby March future and into the May contract. Traders were anticipating at least one more solid day of position rolling by the fund accounts Wednesday.

Canola had traded at mainly higher levels for the bulk of the day with some of the early gains linked to steady domestic crusher demand and routine exporter pricing. Gains in canola were also influenced early by the advances seen overnight in Malaysian palm oil and European rapeseed values, brokers said.

Some buying back of previously sold positions was also evident and also generated some support for canola.

The upside in canola was limited by line company selling at the highs and by the large domestic supply of canola. The potential for a record sized South American soybean crop also restricted the upside price potential in canola.

The downturn experienced by CBOT soybean futures also contributed to some late selling interest in canola, traders said.

There were an estimated 18,098 canola contracts traded Tuesday, down from 20,049 during the previous session. Of the contracts traded, 13,356 were spread related.

Western barley futures were steady to higher at the close, with only the two nearby contracts experiencing and sort of action. Much of the activity in barley was the rolling out of the March future and into the May contract, brokers said. Activity was a light two way affair between commercials.

There were 51 barley contracts that changed hands during the session. On Monday, 50 barley contracts were traded. Of the contracts traded Tuesday, 50 were spread related.