Winnipeg Commodity Exchange Sees Downward Price Action in Canola and Other Commodities

As of midsession on February 16, 2005, grain and oilseed futures at the Winnipeg Commodity Exchange were trading at mainly lower levels, with canola futures experiencing significant declines due to the sell-off in CBOT grain and soybean values. The downward momentum in the market was further exacerbated by fairly active hedge pressure and the absence of fresh demand from both the export and domestic sectors. Meanwhile, Western barley futures were mainly lower due to poor demand, weakness in CBOT corn futures, and a pick up in hedge selling.

Key Takeaways:

• Canola futures were lower at midsession, with prices trading between C$1.90 to $2.20 under as 1,700 March/May contracts were spread.
• The decline in canola prices was attributed to the sell-off in CBOT soybean and soyoil values, as well as weakness in Malaysian palm oil futures.
• Western barley futures were mainly lower due to poor demand, weakness in CBOT corn futures, and a pick up in hedge selling.
• Feed wheat futures were mixed at midsession, with nearbys unchanged and deferreds up, due to the large feed supply situation and the absence of fresh demand.
• New crop contracts in feed wheat found support from ideas that feed wheat output in Western Canada will return to more normal levels in 2005-06.
• Traders reported light technically based buying on the open, but it was overwhelmed by increased hedge pressure.

Statistics:

• 1,700 March/May contracts were spread in canola, trading between C$1.90 to $2.20 under.
• Estimated volume in canola was pegged at 6,678 contracts.
• 175 Western barley contracts had been traded by midsession.
• 124 feed wheat contracts had been traded by midsession.
• Roughly 50% of wheat harvested during the 2004-05 harvest graded as feed quality.

Sources:

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