Canola Futures Trade in Mixed Range Amid Bearish Fundamentals

Strategic Insights -

Canola futures at the Winnipeg Commodity Exchange were trading in a mixed range at midsession, fluctuating between new contract lows and slight gains, after a bearish technical and fundamental situation weighed on the market. Large supplies and limited end-user demand were key factors contributing to the decline, while strength in the Canadian dollar and advances in CBOT soybean and soyoil futures also influenced trading. Position evening ahead of Wednesday's Statistics Canada crop production survey was a notable aspect of the activity.

Key Takeaways:

  • Canola futures traded in a mixed range at midsession, with nearby contracts establishing new contract lows before rebounding slightly due to light commercial buying.
  • Bearish fundamental considerations, including large supplies and limited end-user demand, contributed to the decline in canola values.
  • Continued strength in the Canadian dollar, with the currency reaching its highest level in 14 years, also affected canola prices.
  • Short-covering and light exporter pricing of routine export business with Japan were among the factors contributing to the recovery in canola values.
  • Technically, canola's chart picture remains pointed downward, traders said.
  • The advances posted in CBOT wheat and corn futures and the return of extreme cold temperatures to parts of Western Canada also influenced the trading of Western barley and feed wheat futures.

Statistics:

  • An estimated 2,222 canola contracts had changed hands at midsession.
  • The spread between January and March contracts in canola was C$7.00 to C$7.60 per metric ton.
  • A total of 23 feed wheat contracts and 73 western barley contracts had traded at midsession.

Sources:

  • Resource News International, "Canola futures trade in mixed range amid bearish fundamentals," December 05, 2005.
  • COMTEX.