CNS Canada –– ICE Futures Canada canola contracts were mixed during the week ended Wednesday, with the nearby January contract hitting its weakest levels in two months, but the more deferred positions seeing some relative strength as the intermonth spreads saw some adjustment.
Traders increased their net short positions in the front month from about 10,000 contracts to 15,000 over the course of the week, according to market participants.
The January contract hit a session low of $465 per tonne during the week, which may set the stage for a test of the $459 per tonne low hit in early September, according to Keith Ferley of RBC Dominion Securities in Winnipeg. He described the general bearishness in canola as “a slow leak,” with little in the market to warrant a turn higher.
While both exporters and domestic crushers continue to show solid demand, Ferley said the rising production ideas would keep a lid on any rallies.
While a lack of farmer selling was limiting the downside for the time being, the supplies are still there and end users will be reluctant to bid up the market, he said. Statistics Canada releases its next official production estimates on Dec. 4, and “the feeling is that the crop is on the bigger side.”
While canola lacks any supportive fundamental news of its own, Ferley said outside influences, such as U.S. futures or South American crop conditions, will provide a larger role over the next few months.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.