By Glen Hallick, MarketsFarm
WINNIPEG, Feb. 7 (MarketsFarm) – Intercontinental Exchange (ICE) canola futures were higher at midday Monday, but an analyst warned there isn’t much propping up the oilseed.
Despite sharp increases last week in the Chicago soy complex, canola lagged behind more than usual he stressed.
“I think what’s happened is the commercials are tired of paying these inverses. When they get any farmer hedges, they’re not putting the hedges in anymore. They’re just going along with cash grain. That’s why the open interest is going down,” the analyst explained.
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He added that it’s mostly likely “the algorithms and the locals” doing much of the trading, with the commercials largely standing to the side.
“The farmers are cash rich, so they’re not selling,” the analyst continued, noting that many of them want C$25-26 per bushel, with some hoping for C$30.
But he stressed that canola failed to make the larger gains in following comparable oils, which to him suggests it wouldn’t take much to get prices to drop sharply. Especially if the United States Department of Agriculture were to issue a bearish supply and demand report on Wednesday or if rain began to fall on South American crops.
The Canadian dollar was higher with the loonie at 78.86 U.S. cents when compared to Friday’s close of 78.38.
Approximately 14,450 canola contracts were traded as of 10:42 CST.
Prices in Canadian dollars per metric tonne at 10:42 CST:
Price Change
Canola Mar 1,023.40 up 6.40
May 1,011.50 up 9.50
Jul 985.10 up 8.70
Nov 843.50 up 8.80
