ICE Canola Recovers From Lows Of The Day
| 3 min read
| By Dwayne Klassen, Resource News International |
| April 27, 2009 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform were trading at lower levels at 10:55 CDT. Declines were prompted by the swine flu outbreak in Mexico and the losses posted in the CBOT soybean complex, market watchers said.
Some of the initial selling was fueled by ideas that lower pork consumption will reduce feed demand from the grain and oilseed markets, traders said. CBOT soybean, soyoil and soymeal values also fell in response to that news. Adding to the downward price action were the declines posted overnight in Malaysian palm oil and European rapeseed futures. Losses in the equity markets overseas overnight and in the North American sector early Monday contributed to some of the downward price action. The equity sector moved lower initially on ideas that the swine flu outbreak could impede the global economic recovery, brokers said. Both commercials and speculators were some of the featured sellers of canola. Some of the downward price action in canola reflected the pricing of canola by farmers, especially with cash bids for the commodity coming close to hitting C$10 a bushel in some locations across western Canada, traders said. Weakness in crude oil values overnight helped to put downward pressure on canola. Canola values have begun to recover from the early lows with speculators and commercials both returning to the buy side of the trade, brokers said. "They’ve seen the panic and sold, but now with more understanding of the situation beginning to filter through, common sense buying has returned," one trader said. Some of the commercial interest in canola was believed to be covering both old business as well as new business on the books, traders said. The commercial interest was also said to be for domestic processors. Some support in canola also came from continued fallout from Friday’s planting intentions report from Statistics Canada which showed that producers in western Canada were planning on seeding less canola this year than the previous year. Ideas that producers will begin focussing on planting crops instead of concentrating on marketings, helped to fuel some of the recovery in canola, brokers said. The recovery in canola was also prompted by CBOT soybeans and soyoil values beginning to move off their lows of the day. There were an estimated 7,763 canola contracts traded at 10:57 CDT. Of that total, an estimated 2,032 contracts were spread related. At 10:57 CDT, 32 western barley futures had changed hands, with 32 contracts of that amount spread related. Prices in Canadian dollars per metric ton at 10:57 am CDT: Price Change W.Barley Jul $146.90 unch |
