January 21, 2010

ICE rapeseed weaker on CBOT soy declines

Rapeseed contracts on the ICE Futures Canada platform were trading at lower levels at midday Wednesday (Jan 20) after starting the day off on a firmer footing.

Early gains were linked to oversold price sentiment and the weakness in the Canadian dollar, market watchers said.

Some early strength was also linked to steady exporter demand as well as a small pick-up in domestic crusher demand, brokers said. Gains in European rapeseed futures overnight had also provided some minor underlying support for rapeseed. 

However, with the start of the North American day session, CBOT soy and soyoil futures pushed lower, which in turn took rapeseed off its highs and sparked some selling that took most contracts down, traders said.

Bearish chart signals also triggered some speculative liquidation orders that contributed to the weakness in rapeseed.

Light, but steady, hedge selling by elevator companies, helped to undermine rapeseed futures. The favourable weather conditions for the development of the South American soy crop helped to weigh on rapeseed futures, brokers said.

The only thing that is keeping rapeseed from posting sharp losses is the huge drop in the value of the Canadian dollar, a broker said. He said the drop in the currency was said to have stimulated some fresh commercial demand from both the export and domestic sectors.

There were an estimated 3,187 rapeseed contracts traded at 10:37 a.m. CST. Of the contracts traded, 756 were spread related.