(Resource News International) — Traditional commodity funds are holding large short positions in canola, while speculative index funds remain long the market. The funds were actively rolling those positions out of the nearby July contract and into the November futures Friday, and traders expected fund rolling to remain a feature in the week ahead.
Trade estimates on the size of the commodity fund net short position range from 5,000 to as much as 21,000 contracts, spread out between the July and November canola futures.
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.
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If the actual fund position is closer to the high end of the estimated range, canola could be open to a short-covering bounce, although a broker said the range-bound technical outlook would likely keep the fund position relatively stable for the time being.
On the other side, the index funds always trade on the long side of the market and are currently holding a net long position in the July and November futures of 6,000 to 10,000 contracts, according to traders.
