WINNIPEG--Intercontinental Exchange canola futures were taking a step back at midday Thursday most likely due to some profit-taking, according to a trader. For several days canola was swinging higher along with gains in other edible oils.
"We got a sudden turn in the undertones, but nothing is collapsing by any means," the trader commented.
"When you got a tight supply situation, the futures market becomes massively slanted in favor of the longs. The shorts lose the ability to make significant deliveries," he added.
The trader said canola remains sturdy and will need to remain high through the coming winter.
As for the October supply and demand report from Agriculture and Agri-Food Canada, or AAFC, the trader was skeptical of the numbers. That being AAFC relies on data from Statistics Canada, which he suggested the markets have little confidence in the latter's methodology.
Nevertheless, the trader said this year's production is probably very close to the 12.8 million tonnes AAFC cited, but he predicted exports will lower than 6.5 million tonnes forecast and domestic usage will exceed the projected 7.7 million tonnes.
Although Australia's canola exports are to hit a record 4.5 million tonnes, the trader suggested that extra 1.5 million tonnes over last year won't have much of an effect on the market.
The Canadian dollar was slightly lower with the loonie at 81.02 U.S. cents compared with Wednesday's close of 81.11.
About 17,100 canola contracts were traded as of 11:37 a.m. ET.
Prices in Canadian dollars per metric tonne at 11:37 a.m. ET:
Nov 939.10 dn 10.20
Jan 929.60 dn 15.00
Mar 913.30 dn 14.00
May 888.30 dn 11.60
Source: Commodity News Service Canada, firstname.lastname@example.org
(END) Dow Jones Newswires