WINNIPEG: ICE Canadian canola futures jumped on Tuesday to their highest nearby price in nearly 13 years, driven by investors covering short positions and tight physical stocks.
Commercials who hold short positions as hedges in the nearby March contract are waiting for funds to roll their long positions forward, but some are covering shorts already as the market soars, a broker said.
The price runup will force the market to ration demand between seed exports and domestic crush, the broker said.
Canola’s gains also reflect a physical shortage of Canadian canola and technical strength in the market, said analyst Wayne Palmer.
March canola climbed $17.50 or 2.6% to $693.20 per tonne.
The March contract rose as high as $705.70, the highest nearby price since February 2008.
March-May canola spread traded 6,210 times.
US corn futures surged 4% as news of fresh export sales to China re-ignited concerns about tightening US and global grain supplies, and soyabeans followed corn higher.
Euronext May rapeseed futures and Malaysian March palm oil futures edged higher.
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