ICE daily canola open interest nears record levels

Canola open interest on the ICE Futures Canada trading platform is within striking distance of establishing an all-time new record high, based on data from the exchange.

Daily open interest in all canola futures months totalled 211,501 contracts on Wednesday. While that was down from the April 2 level of 213,363 contracts, it was very close to the current record level of 216,984 contracts that was established at the close of trade on Feb. 11, 2011.

At 10:20 CDT on April 5, daily canola open interest was 213,773 contracts.

Large index and commodity fund demand for canola has helped to build the open interest total in canola, said Bill Craddock, a current commodity trader and southern Manitoba producer.

The prospects of record-large area being seeded to canola in the spring of 2012 was also viewed as an enticing factor to take on positions in canola futures, a broker said, not wanting his name used.

Current estimates suggest Canadian producers will seed between 21 million and 23 million acres to canola this spring. In 2011, 18.9 million acres were seeded to canola in Canada.

"You also cannot ignore the record-large usage of canola by the domestic and export sectors and the need to safeguard that demand in the futures market," said Mike Jubinville, an analyst with ProFarmer Canada.

He said there was a lot of front-loading of demand ongoing in the futures market, particularly the November canola future.

"Open interest in new-crop November is larger than the front months, which is slightly unusual for this time of year," Jubinville said.

The possibility of weather issues developing in Western Canada over the summer also can be linked to the covering of positions in the futures market, Craddock said.

Jubinville pointed out that open interest in CBOT (Chicago Board of Trade) soybean futures were also sitting at some pretty high levels, so it stands to reason that canola open interest would also be up.

"There is some concern about the global supply of oilseeds, not just soybeans and canola, but palm oil as well as others," Jubinville said. That in turn has also translated into the interest in the oilseed contracts.

"However, with the large open interest, which seems to be built on mostly long positions, comes the warning, that what goes up, may also come down," Jubinville said.

While China and other end-users have been eager to forward-book canola and soybeans, there is also the chance of cancellations popping up.

Officials from ICE Futures Canada were not available for comment.

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