ICE Canola Contracts Mixed, Profit-taking vs Weather
| 2 min read
| By Dwayne Klassen, Resource News International |
| June 16, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform were trading in a mixed range at midday with the nearby contracts up slightly and the deferred contracts down. Canola had been trading at mainly lower levels with the early declines associated with sentiment that values were overbought and were in need of a downward correction, market watchers said.
Early weakness in canola had also been associated with profit-taking by a variety of market participants. "A lot of the action so far has consisted of funds repositioning themselves," a broker commented. Strength in canola was still being attributed to the weather concerns in western Canada. There were strong indications that producers in both Saskatchewan and Manitoba will not be able to plant canola ahead of crop insurance deadlines given the extremely wet field conditions, brokers said. Concerns about damage to earlier seeded canola fields also continues, and was helping to provide some underlying support. The nearby contracts were also finding good support from the total absence of farmer deliveries into the cash pipeline, traders said. They noted that producers in Manitoba and Saskatchewan, have locked up their bins given the uncertain canola production outlook. However, producers in Alberta were pricing some canola given that the weather threat to the crop was not as great. Steady domestic crusher demand was helping to fuel the advances in the nearby contracts, brokers said. Some early support in canola had come from a downturn in the value of the Canadian dollar, but the currency has since recovered and was sitting at a slightly firmer level against the US dollar at midday. The upturn in the Canadian unit helped to temper the upside, brokers said. The rolling of positions out of the nearby July future into the November contract by funds continued to be a feature of the activity and was a factor in the volume total. There were an estimated 12,458 canola contracts traded at 10:23 CDT. Of the contracts traded 9,262 were spread related. There were no western barley futures traded as of 10:23 CDT.
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