ICE Canola Treks Lower Following CBOT Soybeans
| 2 min read
| By Dwayne Klassen, Resource News International |
| January 7, 2010 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform were trading at lower price levels at midday with much of the downward price momentum associated with the sell-off seen in the CBOT soybean complex, market watchers said.
The selling in canola started overnight sparked by the declines seen in Malaysian palm oil and e-CBOT soybeans, brokers said. Losses in global crude oil and continued firmness in the Canadian dollar helped to undermine canola values. Additional selling in canola was stimulated by the losses seen in CBOT soybean and soyoil futures with the start of the North American day session. As the declines in CBOT soybeans steepened, the weakness in canola was also amplified, traders said. Much of the early selling was said to have been speculative in nature, with some liquidation of long positions also being triggered by the downward action seen in the oilseed sector, brokers said. Elevator company hedge selling helped to undermine canola futures, with producers not wanting to get caught holding onto canola supplies given the downturn in CBOT soybeans, brokers said. They noted that some market participants were now anticipating CBOT soybean futures to drop below the US$10 per bushel level. The favourable conditions for the development of the South American soybean crop was also being viewed as an undermining price influence. Reduced demand for canola from the domestic sector helped to weigh on prices. The declines in canola were being slowed by scale-down commercial buying, believed to be covering both old and new export business, traders said. The buying back of previously sold positions was also evident. There were an estimated 4,046 canola contracts traded at 10:33 CST. Of the contracts traded, 750 were spread related. There was 1 western barley future traded as of 10:33 CST. The minor activity was conducted between commercials, brokers said. |
