(Resource News International) — As the month of October approaches, the traditional commodity funds are holding large long positions on the ICE Futures Canada canola market, as are the speculative index funds.
There has been next to no rolling on contracts from November to January. Keith Ferley, commodities and futures advisor with RBC Dominion Securities in Winnipeg, said there is still 100 per cent left to roll in that time period.
Trade estimates on the size of the commodity fund net long position are around 35,000 contracts.
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Without the Chinese market, it’s only a matter of time before canola futures are poised to break below C$600 per tonne in its November contract, said Phil Speiss, trader with RBC Dominion Securities in Winnipeg.
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.
The large fund long position could leave the canola market open to a profit-taking correction lower, according to market participants.
Meanwhile, on the other end of the scale, the index funds always trade on the long side of the market and are currently holding a long position in the November and January futures of around 10,000 contracts, according to Ferley.
Total open interest in the November canola contract currently sits at around 92,500 contracts, with 51,500 open positions in January.
