ICE Canola Down With Soybeans, Farmer Hedges

By Phil Franz-Warkentin, Commodity News Service Canada

Dec. 7, 2012

Winnipeg – Canola contracts on the ICE Futures Canada platform were weaker at 10:45 CST Friday, as spillover from the losses in the CBOT soy complex and an increase in farmer hedges weighed on values.

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The bounce seen earlier in the week encouraged an uptick in farmer sales, according to a broker accounting for the resulting hedge pressure in the market on Friday. He said the failure of the January contract to hold above the psychological C$600 per tonne level was also bearish, with some light speculative selling also a feature.
Losses in the CBOT soy complex and a firmer tone in the Canadian dollar added to the weakness in canola, according to participants.
However, outright volumes were very thin, with the majority of the trade tied to intermonth spreading. The January/March spread accounted for most of the volumes, as participants were busy rolling out of the front month.

Concerns over tightening Canadian canola supplies did remain somewhat supportive, limiting the losses. Solid end user demand and production uncertainty for soybeans in South America helped limit the losses as well.
At 10:45 CST, about 10,000 canola contracts had changed hands with intermonth spreading a feature.
Milling wheat futures were lower, as the thinly traded commodity continues to see participants exit the December contract. Durum and barley futures were untraded and unchanged.
Prices in Canadian dollars per metric ton at 10:45 CST:Price Change

Canola Jan 597.90 dn 1.50

Mar 594.10 dn 3.00

May 592.60 dn 2.90

Milling Wheat Dec 289.10 dn 1.80

Mar 301.60 dn 1.80

Durum Dec 312.00 unch

Mar 316.00 unch

Barley Dec 245.00 unch

Mar 248.00 unch