CNS Canada — ICE Futures Canada canola contracts hit their highest levels in seven months during the week ended Wednesday, but ran into resistance to the upside and posted small losses in most months on a week-by-week basis.
The nearby March contract was down sharply on the week, as traders exited the front month and rolled their positions into the May futures ahead of first deliveries.
After trading at an inverse since December, the fact that the futures were once again in a carry position could be negative for the market if someone is planning on making deliveries against the March contract, said commodity futures advisor Keith Ferley of RBC Dominion Securities.
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Ferley said the strengthening Canadian dollar also had the potential to weigh on values.
Farmer selling came forward at the highs during the week, but Ferley said any more sales were likely now waiting above the market as widening basis levels cause producers to move back to the sidelines.
From a chart standpoint, the more active May contract is still trending higher, said Ferley. He noted fund traders were still holding a net long position of roughly 45,000 positions in that month and have room to add to those longs.
The May contract hit an intersession high of $473.90 on Tuesday, which will provide a nearby upside target, said Ferley.
While fund long liquidation is also a possibility, Ferley said the funds were likely content “treading water” with their current positions as they wait to see which way the market moves from here.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Winnipeg company specializing in grain and commodity market reporting.
