ICE Canola Midday: ‘Gargantuan speculative long position’ could be major problem

By Glen Hallick, MarketsFarm

WINNIPEG, Nov. 5 (MarketsFarm) – Intercontinental Exchange (ICE) canola futures were on the decline at midday Friday, being pulled down by weakness in the Chicago soy complex.

“We’re looking at a very bearish situation right now,” a trader said about soyoil in particular.

“If beanoil is at 65 cents per pound, then ‘expensive for canola’ is C$950 per tonne. If beanoil is at 55 cents, then ‘expensive for canola’ is only C$850. If beanoil goes to 50 cents, then ‘expensive for canola’ is C$775 to C$800,” he explained.

As well there were losses in European rapeseed and Malaysian palm oil that added more pressure on canola.

The trader stressed “there’s a gargantuan speculative long position” in canola, and need to figure out how to get out of it.

“Because of the staggering size of the long position, if this thing starts to roll, that brand new C$60 per tonne trading limit is going to be hit one day,” he stated, noting it likely won’t happen today, but a sharp collapse is likely coming.

The Canadian dollar was virtually unchanged, with the loonie at 80.32 U.S. cents compared to Thursday’s close of 80.33.

Approximately 12,150 canola contracts were traded as of 10:48 CDT.

Prices in Canadian dollars per metric tonne at 10:48 CDT:

Price Change
Canola Jan 967.30 dn 11.40
Mar 945.20 dn 10.10

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