By Glen Hallick, MarketsFarm
WINNIPEG, June 9 (MarketsFarm) – Intercontinental Exchange (ICE) canola futures were falling sharply at midday Wednesday, with some contracts coming close to the C$30 per tonne daily limit.
A Winnipeg-based trader said there are three factors to the slide in prices.
“Definitely the rain, as it has alleviated the drought-like conditions. Although this is only the beginning of June, we’re going to need more timely rains,” the trader stated.
The second reason being the steep declines in Chicago soyoil as its demand has dropped off and supplies have increased, he said.
The third being a snowball effect in the market, the trader noted.
“Because the funds are holding massive long positions, once you see the market going to the downside, the funds are the first ones to step on the gas pedal and liquidate those long positions and cause the market to freefall,” he explained.
Also contributing to the drop in canola were declines in Malaysian palm oil and European rapeseed.
The Canadian dollar was relatively steady, with the loonie at 82.61 U.S. cents compared to Tuesday’s close of 82.67.
Approximately 14,400 canola contracts were traded as of 10:38 CDT.
Prices in Canadian dollars per metric tonne at 10:38 CDT:
Canola Jul 836.90 dn 28.90
Nov 747.40 dn 26.80
Jan 746.50 dn 26.10
Mar 742.00 dn 22.90