Commodity Funds Maintain Large Short Position in Canola Contracts at Winnipeg Commodity Exchange

Commodity funds hold a substantial short position in the January canola contract at the Winnipeg Commodity Exchange, with estimates ranging from 8,000 to 9,000 contracts. Despite some covering of those short positions over the past couple of sessions, the technical signals in canola remain pointed downwards, indicating that funds are unlikely to modify their position at this time. The market is expected to be impacted by ample supply, harvest pressure from the U.S., and favorable planting and growing conditions in Brazil and Argentina.

Key Takeaways:

• Commodity funds maintain a large short position in the January canola contract, with estimates ranging from 8,000 to 9,000 contracts.
• Despite some covering of those short positions, the technical signals in canola remain pointed downwards, indicating a bearish price influence.
• Ample supply, harvest pressure from the U.S., and favorable planting and growing conditions in Brazil and Argentina are expected to keep downward pressure on canola futures in the near term.
• Fresh export demand for Canada's canola remains scarce, with canola values estimated to be C$30 per tonne too high to attract fresh business.
• The grain trade generally likes to keep an eye on the position held by commodity funds, as their actions can significantly impact the market.

Statistics:

• Commodity funds are short 8,000 to 9,000 contracts in the January canola contract.
• Nearby support in the January contract is pegged at C$285 per tonne, with resistance seen at C$300 and C$315.
• The January canola futures on Monday, November 15, closed at $298.70.
• Canola values are estimated to be C$30 per tonne too high to attract fresh business.
• 7.2 million to 7.5 million tonnes of Canadian canola are available for export.

Sources:

• [Resource News International via COMTEX, November 15, 2004]