(Resource News International) — Both the traditional commodity funds and the large commodity index funds have taken up long positions in the November ICE Canada canola futures contract.
Estimates from market participants placed the regular funds long about 20,000 contracts or more in the November canola future while the large index funds were long the November contract to the tune of around 10,000.
At the end of May, trade estimates had placed the regular commodity funds short the July and November futures anywhere from 5,000 to 21,000 contracts.
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Market participants usually follow the movements in the funds with interest, as it is said that a position of 10,000 contracts or more can independently move the futures.
The large index funds always trade on the long side of the market and at the end of May had been holding a net long position in the July and November futures to the tune of 6,000 to 10,000 contracts, according to traders.
Most of the fund positions are chart based, with the long-term technicals still pointed upwards, said Keith Ferley of RBC Dominion Securities in Winnipeg.
Mike Jubinville, a Winnipeg analyst with ProFarmer Canada, said there is strong overhead resistance in the November contract at $430 per tonne.
“Every time prices have tried to push canola through that level it has stopped,” Jubinville said.
The November canola future appears to be consolidating and may be gearing up for another push to that level, he noted. A penetration of resistance at that level could see a push significantly higher.
“One has to remember that there is no need to ration off canola demand all in a couple of days,” Jubinville said.
“As a result, prices might actually pull back somewhat, before gaining the upward momentum to challenge that resistance point again.”
