CNS Canada — The recent move to New York for the ICE Futures canola contract has brought with it fresh oversight from the U.S. Commodity Futures Trading Commission (CFTC).
The weekly commitment of traders (CoT) report compiled by the CFTC provides details on who is trading canola and the size of their positions — but the numbers are still not as clear as they could be.
“For years we were asking for a commitment of traders report,” said a long-time Winnipeg-based trader. However, now that a report is finally available “it hasn’t provided the clarity we were hoping for.”
He described the report as “very murky” due primarily to the fact that the reportable position for canola is so small at only 25 contracts. That works out to only 500 tonnes of canola, which compares with the Chicago Board of Trade soybean reportable position of 150 contracts, which works out to about 20,000 tonnes.
The traditional commodity and index funds generally follow set patterns in their activity, making the CoT report a useful tool for market watchers. However, the large amount of smaller players being included in the reportable canola numbers lessens how much weight can be put in those trends.
“It’s distorting the numbers quite a bit,” added a second long-time canola broker. “Everybody’s being designated as a large trader.”
The broker noted nearly all of his clients — many who are farmers only trading small lots — had to register with the CFTC.
For canola, less than one per cent of the total open interest was counted as non-reportable in the latest CoT report. That compares with soybeans, where about 10 per cent of the open interest was non-reportable.
While the numbers may not be as clear as they could be for canola, traders agreed that the trends being shown still had some value.
According to the latest report, managed money and other reportable speculators increased their net short position to roughly 39,200 contracts in canola during the week ended Nov. 20, which was an increase of about 10,000 on the short side from the previous week.
Long liquidation was minimal, with the creation of new shorts behind much of the move.
Traders estimated that the actual fund short position was likely closer to 30,000, with the remainder of that number tied to smaller participants.
Increasing short positions are seen as a bet that prices will fall.
Commercials and producers grew their net long position in the market by about 10,000 contracts, to 39,000.
Total open interest in the canola market increased by about 6,500 contracts compared to the previous week, to come in at 172,689 contracts.
At the Chicago Board of Trade, speculators increased their net short position in soybeans slightly, to about 42,300 contracts, from 41,000 the previous week.
— Phil Franz-Warkentin writes for Commodity News Service Canada, a Glacier FarmMedia company specializing in grain and commodity market reporting. Follow him at @PhilFW on Twitter.