Winnipeg Commodity Exchange: Canola Futures Rally, Fund Positioning Drives Spreading Activity

Strategic Insights -

The Winnipeg Commodity Exchange (WCE) witnessed a significant rally in canola futures on Monday, with prices surging sharply in heavy trade. The activity was largely driven by commodity funds rolling their positions from January to March, with approximately 65% of the spreading activity attributed to funds, while commercials accounted for the remaining 35%. The weak Canadian dollar, strength in the Chicago Board Of Trade (CBOT) soy complex, and export pricing for Mexico provided support for canola prices. However, the gains were capped by the lack of strong Japanese demand and the large Canadian canola crop.

Key Takeaways:

  • Canola futures rallied sharply in heavy trade, with prices trimmed back to moderate gains at the close.
  • The activity was dominated by commodity funds rolling positions from January to March, with 65% of the spreading attributed to funds.
  • Commercials accounted for the remaining 35% of the spreading activity.
  • The weak Canadian dollar, strength in the CBOT soy complex, and export pricing for Mexico supported canola prices.
  • The lack of strong Japanese demand and the large Canadian canola crop capped the gains.
  • Fimat was a notable buyer in canola.
  • Commercials dominated the trade in canola, with commission houses also evident.

Statistics:

  • 65% of spreading activity in canola was attributed to commodity funds rolling positions.
  • Commercials accounted for 35% of the spreading activity in canola.
  • The Canadian dollar's weakness contributed to support for canola prices.
  • The CBOT soy complex's strength also supported canola prices.
  • Export pricing for Mexico provided additional support for canola prices.

Sources:

  • Resource News International via COMTEX
  • COMTEX (http://www.comtexnews.com)