By Dwayne Klassen, Commodity News Service Canada
March 28, 2013
WINNIPEG – Canola futures on the ICE Canada trading platform finished Thursday’s session with significant declines. The sharp downward push in canola futures came in response to a bearishly construed USDA quarterly grain stocks report that was released during the session, market watchers said.
The USDA pegged US soybean supplies as of March 1 at 1.0 billion bushels, which came in above pre-report expectations.
The larger than anticipated supply of US soybeans sparked a major sell-off in CBOT soybean and soyoil futures, which spilled over to weigh heavily on canola, brokers said.
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On the way down sell-stops were triggered, exaggerating the price declines seen in canola.
Bearish sentiment in canola also reflected the ongoing harvest of a record large soybean crop in South America, and from reports that soybean supplies were beginning to make their way out of Brazil, traders said.
Chart-based speculative and commodity fund liquidation orders were also evident and contributed to the price weakness in canola, brokers said.
Some of the weakness in canola also reflected a pick up in elevator company6 hedge selling, triggered in part by increased farmer deliveries of canola into the cash pipeline. News that Australia can now ship canola to China, also was viewed as bearish for canola futures on the ICE Canada platform. Canada and Australia are competitors on the global export market.
Some early support in canola had stemmed from light commercial buying, thought to be pricing routine export business.
The evening up of positions ahead of the three-day Easter holiday weekend was a minor feature of the activity. The ICE Canada platform will be closed on March 29 in observance of Good Friday.
There were an estimated 23,824 canola contracts traded Thursday, up from the 17,215 contracts that changed hands during the previous session. Of the contracts traded, 13,842 were spread related.
No milling wheat, durum or barley contracts were traded during the session.
Prices are in Canadian dollars per metric ton.
