December 11, 2009

ICE canola weaker, "spreading the main trading feature"

Canola contracts traded on the ICE Canada platform were weaker at 11:52 a.m. EST Thursday (December 10), with inter-month spreading the feature as participants roll out of the nearby January contract.

Grain company hedge selling accounted for some of the weakness in the market, according to a canola broker. He said strength in the Canadian dollar and the mixed tone in the Chicago Board of Trade soy complex also weighed on canola values.

Large Canadian canola supplies overhanging the market were also cited as a bearish price influence.

However, routine Japanese pricing helped underpin canola values, according to the broker. Commodity funds were also thought to be on the buy side on a scale-down basis.

At 11:52 a.m. EST, about 10,800 canola contracts had changed hands, with the January/March spread accounting for the majority of the activity. The broker said domestic crushers and grain companies were the main participants in the spread trade. He added that the index funds are already finished rolling their positions forward, while the commodity funds will be exiting their January positions later this month.