Fund Selling Weighs on Intercontinental Exchange Canola Futures

what happened

Intercontinental Exchange canola futures closed lower on Tuesday as funds kept selling. An analyst told Dow Jones Newswires that speculators were reducing an overextended long position in the oilseed. The same analyst said Prairie farmers have already sold as much canola as they want to at current prices.

Crude oil added to the pressure as hopes grew that the United States and Iran will return to negotiations and crude stayed on the downside. Chicago soy complex, Malaysian palm oil and European rapeseed also moved lower. Cold, rainy and snowy weather across the Prairies in the coming days will limit how much of the region's harvest can be finished.

The Canadian dollar eased on Tuesday afternoon, trading at 71.17 US cents against Monday's close of 71.30. Canola volume reached 67,672 contracts, down from 76,453 on Monday, with 42,812 of them spread trades. The November contract settled at C$775.70 a tonne, down 4.10, January at C$787.30 (down 6.50), March at C$798.80 (down 7.30) and May at C$807.10 (down 7.20).

why it matters

Two factors matter most for canola: fund liquidation of long positions and the pace of the Canadian harvest. Weaker crude also reduces the appeal of vegetable oils as biofuel feedstock. Data is sourced from Glacier FarmMedia.

tags

instruments