Winnipeg Commodity Exchange Sees Decline in Grain and Oilseed Futures

Strategic Insights -

The Winnipeg Commodity Exchange witnessed a mostly lower trading session for grain and oilseed futures on February 16, 2005, with the notable exception of canola futures. The decline in CBOT soybean and soyoil values weighed heavily on canola, while weakness in Malaysian palm oil futures also contributed to the downward momentum. Active hedge pressure further exacerbated the downward trend, as some traders attempted to find support in technically based buying. Meanwhile, attractive farmgate prices in Saskatchewan and Alberta led to increased deliveries, but the absence of fresh demand from both the export and domestic sectors contributed to the downward price action in canola.

Key Takeaways:

  • Grain and oilseed futures at the Winnipeg Commodity Exchange experienced a decline, with canola futures being the exception.
  • The downward price action in canola was influenced by the decline in CBOT soybean and soyoil values as well as weakness in Malaysian palm oil futures.
  • Active hedge pressure played a significant role in exacerbating the downward trend.
  • Increased farmer deliveries were associated with attractive farmgate prices in Saskatchewan and Alberta, but were largely offset by the absence of fresh demand.
  • The implementation of spring road restrictions necessitated the movement of some products ahead of the restrictions.
  • A weaker Canadian dollar helped slow the price drop in canola.
  • Estimated volume in canola was 6,678 contracts.
  • The decline in grain and oilseed futures was mainly attributed to poor demand, weakness in CBOT corn futures, and a pickup in hedge selling.

Statistics:

  • Decline in canola futures: By midsession, there had been 1,700 March/May contracts spread between C$1.90 to $2.20 under.
  • Estimated volume in canola: 6,678 contracts
  • Volume of Western barley futures traded: Not specified
  • Hallmark: No specific trading volume was mentioned for barley
  • Canada dollar: The Canadian dollar experienced a decline, which slowed the price drop in canola.

Sources:

  • ODJ via COMTEX (Dow Jones)
  • News Provided by COMTEX (http://www.comtexnews.com)
  • Research by Dwayne Klassen, Dow Jones Newswires; (204) 947-1700; resnews@compuserve.com