Canola Futures Decline Amid Weakness in Soybean and Soyoil Values

Strategic Insights -

Market watchers attributed the decline in canola futures to the weakness displayed by CBOT soybean and soyoil values, as well as the absence of fresh demand from the domestic and export sectors. Commercial sellers, including some who were believed to be hedging, contributed to the downward price slide. Additionally, bearish chart signals and a slowdown in domestic crusher demand also weighed on the market.

Key Takeaways:

  • Canola futures at the Winnipeg Commodity Exchange (WCE) were trading at mainly lower levels due to declines in CBOT soybean and soyoil values.
  • Commercial sellers, including some who were believed to be hedging, contributed to the downward price slide.
  • Bearish chart signals and a slowdown in domestic crusher demand also weighed on the market.
  • Commodity funds held sizeable short positions in the January future, which contributed to the decline.
  • A slow down in domestic crusher demand was also linked to some of the minor losses seen in canola.
  • Continued scale down buying by exporters provided some support to canola.
  • The Canadian dollar's weakness on Monday morning offered minor support to canola prices.
  • Spread activity was virtually non-existent at midsession.
  • Western barley futures were mostly steady at midsession in quiet trade, with light feedlot pricing providing a small upward price boost.
  • Feed wheat futures were also little changed in choppy activity, with weakness in CBOT grain futures encouraging price declines.
  • Light commercial demand in the absence of willing sellers provided minor support to feed wheat prices.

Statistics:

  • 1,010 canola contracts had changed hands at midsession.
  • Western barley futures were mostly steady at midsession.
  • 10 feed wheat contracts had changed hands at midsession.
  • No western barley contracts had traded at midsession.
  • CBOT soyoil values declined.
  • Domestic crusher demand decreased.
  • Commodity funds held sizeable short positions in the January future.
  • Canadian dollar weakness offered minor support to canola prices.

Sources:

  • Resource News International via COMTEX (Nov 07, 2005)
  • Winnipeg Commodity Exchange (WCE)
  • CBOT (Chicago Board of Trade)