By Phil Franz-Warkentin, MarketsFarm
WINNIPEG, Jan. 6 (MarketsFarm) — ICE Futures canola contracts were higher at midday Tuesday, seeing follow-through strength after Monday’s rally.
- March canola moved above its 20-day moving average, encouraging additional speculative buying.
- Fund traders were holding their largest net short position in canola of the past year at 91,500 contracts as of Dec. 30, according to the latest Commitment of Traders data. That left the market open to a short-covering correction, said an analyst.
- Exporter bargain hunting likely added to the strength in the market, said a second analyst. While China remains absent due to the ongoing trade dispute, he speculated that the country was possibly making purchases through intermediaries.
- Gains in Chicago soybeans and European rapeseed provided spillover support for canola. However, soyoil and Malaysian palm oil were trading near unchanged.
- Large supplies and expectations for burdensome carryout supplies tempered the upside. The March contract was also running into resistance around C$620 per tonne, with the next upside target at C$630 per tonne.
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- An estimated 35,900 canola contracts traded as of 10:41 CST.
Prices in Canadian dollars per metric tonne at 10:41 CST:
Canola Mar 618.00 up 7.20
May 628.30 up 7.20
Jul 635.40 up 6.50
Nov 633.60 up 2.50
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