ICE Canada Review: Short-covering Limits Canola Losses

A lot of the activity seen in canola consisted of index funds moving out of the March contract into the May future.

Canola had traded at lower levels for the bulk of the day with some of the downward price pressure associated with reports that commodity fund accounts were adding to their already large short position, traders said.

Bearish chart signals helped to weigh on canola with a drop off in demand from both the export and domestic processing sector augmenting the downward price slide.

Some of the weakness in canola was also associated with the declines seen in CBOT soybean and soyoil futures for much of the session. Large domestic supplies of canola and the pending large harvest of the soybean crop in South America also were viewed as undermining price influences, brokers said.

Some minor strength displayed by the Canadian dollar during Thursday’s activity also prompted some minor selling in canola.

Much of the buying that surfaced in canola came in the last few minutes of the day, with much of that interest said to be the covering of previously sold positions, traders said.

There were also a few bids for canola under the market from commercials who were trying to covering previously conducted export sales to Japan and Mexico.

Spreading was a feature of the activity and helped to bolster the volume total.

There were an estimated 16,314 canola contracts traded Thursday, up from 10,258 during the previous session. Of the contracts traded, 11,380 were spread related.

Western barley futures were little changed with commercials choosing to remain on the sidelines in the absence of fresh fundamental inputs and ahead of this afternoon’s latest round of Pool Return Outlooks from the Canadian Wheat Board, brokers said.

An estimated 35 barley contracts changed hands during the session. On Wednesday, 55 barley contracts were traded.