By Dwayne Klassen, Commodity News Service Canada
February 6, 2013
WINNIPEG – Canola futures on the ICE Canada trading platform finished Wednesday’s session on a mainly lower footing, although the declines in old crop contracts were slowed by the strong usage pace and the tightening supply situation, market watchers said.
The downward price slide in canola was facilitated in part by the sell-off experienced by CBOT soybean and soyoil futures, traders said. The increased probability of Argentine soybean growing areas receiving rain, also influenced some of the price weakness in canola, brokers said.
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Sentiment that canola futures were due for a correction to the downside after recent strong advances also encouraged some of the early price weakness, traders said.
Steady elevator company hedge selling, tied to good levels of canola deliveries by farmers into the cash pipeline, further added to the bearish sentiment in the commodity. General firmness in the Canadian dollar had also fueled some of the selling interest.
However, the losses in the nearby canola contracts were stalled and some contracts managed to turn higher by the close in response to fairly aggressive buying by domestic processors and export outlets, traders said. The need to ration demand because of the tight canola supply situation also helped to generate some of the price strength.
The buying back of previously sold positions was also evident late in the day, which helped to provide some minor support to the nearby months.
Spreading was again a significant feature of the activity in canola and contributed to the volume total.
There were an estimated 31,884 canola contracts traded Wednesday, up from the 28,409 contracts that changed hands during the previous session. Of the contracts that changed hands, 28,432 were spread related.
There were 5 milling wheat contracts traded during the session at unchanged price levels. No durum or barley contracts were traded.
Prices are in Canadian dollars per metric ton.
