(Resource News International) — Open interest in the ICE Futures Canada market, including both futures and options for canola and the lightly traded western barley contracts, moved to new record highs over the past week and appears poised to continue to rise.
Total open interest in the market reached 211,346 futures and options contracts ahead of the Oct. 14 (Thursday) trading session, which compares with the previous record of 202,666 open positions set on March 5, 2008, according to ICE Futures Canada data. The lion’s share of that open interest was made up by canola futures.
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Brad Vannan, CEO of ICE Futures Canada, said speculators and commercials were both increasing their participation in the canola market.
“There seems to be growing interest in canola by all facets of the industry,” said Vannan, adding that the crop was becoming more important globally, with much of the world demand being met by Canada. “The exchange has been successful in serving the needs of the industry.”
Vannan said concerns about the size of this year’s Canadian canola crop accounted for some increase in daily trading volumes over the past few months, as people with an underlying interest in the commodity increased their risk management and speculators also upped their activity.
However, he said, the rise in total open interest was not seasonal, but rather had been increasing for the past 10 months.
The rising open interest was reflective of the growing canola industry, which is bringing more hedging to the market, he said. The increased hedges are also bringing in more speculation.
“That speaks to the overall health of the contract, because you don’t want it to be lopsided,” said Vannan.
Of the large open interest at ICE Futures Canada, western barley only accounts for 74 contracts.
“Barley’s certainly been a challenge,” said Vannan, although he added that while the barley market is very narrow, ICE Futures Canada was not yet ready to give up on the barley futures.
The contract functions well, according to market participants, but factors such as the smaller domestic livestock market, increases in alternate feedstocks, and slow export movement were limiting the current usage.
