ICE Canola Drops On Large US Soybean Crop
| 2 min read
| By Dwayne Klassen, Resource News International |
| January 12, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform were trading at lower price levels at midday with much of the downward price action linked to the large US soybean crop and the resulting sell-off in the CBOT soybean complex, market watchers said.
Larger than expected US soybean production and ending stock estimates from the USDA in a supply/demand report early Tuesday sparked a wave of selling in canola, brokers said. Some chart based liquidation orders helped to amplify the price slide as did the triggering of some sell-stop orders, traders said. "The carnage in the CBOT soybean market really hurt canola early," a trader said. "However, once canola hit the lows some good pricing surfaced taking the commodity off its lows." The trader speculated that the pricing was mainly covering Japanese requirements. "On report days, especially the ones that are bearish, the Japanese like to price, and today, they were a bit more aggressive than normal in covering recent canola purchases," the trader said. A drop off in elevator company hedge selling, with producers not happy with the current cash price at the country elevator, also helped to take canola off its lows, brokers said. The buying back of previously sold positions was also evident in canola, further alleviating the downward price pressure. Early weakness in the Canadian dollar had also offered some underlying support. However, the currency has since strengthened erasing some of that early support in canola, brokers said. There were an estimated 5,474 canola contracts traded at 10:25 CST. Of the contracts traded, 976 were spread related. There were no western barley futures traded as of 10:25 CST. The limit-down declines in CBOT corn futures were viewed as an undermining price influence on barley, traders said. However, commercials remained reluctant participants. |
