ICE Canada Review: Strong C$ Hurts Canola
| 1 min read
| By Dwayne Klassen, Resource News International |
| March 2, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Tuesday’s session mainly lower with much of the weakness seen across the board related to ongoing upward bounce in the value of the Canadian dollar, market watchers said.
Activity in canola was described by market participants as light and choppy. Canola contracts came under downward pressure throughout the day from the strong Canadian dollar, which was hurting profit margins for domestic processors and making it more expensive for importers to buy Canadian canola, traders said. Some of the price weakness in canola also reflected the large on-farm supplies of the commodity in western Canada and the huge glut of oilseeds on the global market, brokers said. The ongoing harvest of record sized soybean crops in Argentina and Brazil contributed to the bearish price sentiment. The potential for seeded area to US soybeans to be up sharply this spring was also viewed as an undermining price influence, traders said. The losses in canola were tempered by light scale down commercial demand, said to be pricing old export business to Japan and Mexico, brokers said. The buying back of previously sold positions was also evident and helped to slow the price drop. There were an estimated 10,034 canola contracts traded Tuesday, up from 8,457 during the previous session. Of the contracts traded, 5,154 contracts were spread related. Western barley futures were lower with the strong Canadian dollar making it cheaper for end-users to import corn or other feed alternatives from the US for their livestock needs, traders said. The absence of willing buyers helped to amplify the light commercial sell-orders that surfaced during the day. There were 22 barley contracts that changed hands during the session. On Monday, 12 barley contracts were traded. |
