CNS Canada –– Fund traders are still holding large long positions in canola, but could be poised to start liquidating some of those positions as prices near key chart support.
Funds are sitting on a long position in “the mid-40,000 area”, according to a canola broker.
“Further technical weakness would likely bring in some long liquidation that people are worried about — if you’re a bull,” he added.
ICE Futures Canada’s May canola contract settled Tuesday at $457.10 per tonne, which was just a dollar or two above the 50-day moving average.
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The broker said a move below that chart point would likely trigger more fund selling, which could easily build on itself.
Funds were already sellers a few weeks ago, before exporter pricing took it back up and they moved back to the sidelines, according to the broker.
On the other side, “to get them to add to their longs, would have to get back to the $470 (per tonne in the May contract) area,” said the broker.
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.
