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ICE Canada Review: Strong C$ Undermines Canola

| 1 min read

By Dwayne Klassen

By Dwayne Klassen, Resource News International

March 1, 2010

Winnipeg – Canola contracts on the ICE Futures Canada platform finished Monday’s session on the defensive with strength in the Canadian dollar and the glut of oilseeds on the world market behind the price weakness, market watchers said.

Declines in the outside markets, including global crude oil futures, also helped to undermine canola values, brokers said.

Some selling in canola had also been stimulated by the losses seen in CBOT soybean futures. However, when CBOT soyoil values rallied into the close, the losses in soybeans were erased, but the buying momentum failed to ease the losses seen in canola, traders said.

Some chart based speculative liquidation helped to weigh on canola with bouts of hedging by elevator companies also an undermining price influence.

The large global oilseed supply situation helped to weigh on prices as did the huge on farm supply of canola in western Canada, brokers said.

Some underlying support in canola came from light commercial demand, which was said to be covering fresh export business with China. Confirmation of any sales was not available.

The buying back of previously sold positions by fund accounts helped to keep canola off its lows for the day. Some scale down pricing by domestic crushers also helped to limit the price weakness in canola.

There were an estimated 8,457 canola contracts traded Monday, down from 10,136 during the previous session. Of the contracts traded, 1,518 contracts were spread related.

Western barley futures were mainly lower in extremely thin trade. Weakness in CBOT corn futures prompted some light commercial selling. The losses in barley were amplified by the absence of willing buyers, brokers said.

There were 12 barley contracts that changed hands during the session. On Friday, 60 barley contracts were traded.