CNS Canada — The fund short position in ICE Futures Canada canola continues to grow, but market participants believe it may get larger still before those speculators turn around and book profits.
Back in mid-July, the fund short position was already considered large, at over 20,000 contracts.
Speculators have steadily added to that position over the past two months, with the net fund short now pegged at 40,000 to over 50,000 contracts, according to market participants.
“I don’t think they’re maxed out yet,” said a Winnipeg-based broker, adding that “they could continue to sell for a while.”
An analyst said the last time the short position was this large was in February 2014, when the nearby futures were trading at their lowest levels in four years. [Related story]
Short-covering started to come forward in late February, eventually taking values to their highs of the year in April and May. “We have the potential for a short-covering rally… but we have yet to see any moves to cover those shorts,” the analyst added.
Market participants usually follow the movements in the funds with interest, as it is said that a position of 10,000 contracts or more can independently move the futures.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.