Canola Futures Trading
Canola Market Defined and Explained
Within the grain trading market, Canola is a trademarked name of the rapeseed plant from which rapeseed oil is obtained. Canola is part of the larger oilseed complex and, like soybeans and some other oilseeds, is crushed into two component parts: oil and meal. Canola was developed specifically for its nutritional qualities, particularly its low level of saturated fat, and is rich in vitamin E and a good source of omega-3 fatty acids, making it a premium, healthy, food oil. Canola oil is also an important feedstock for the growing biodiesel market.
Canola Futures Contract Prices & Rates
ICE Futures Canada Inc., formerly the Winnipeg Commodity Exchange and now a division of the Intercontinental Exchange, facilitates trading in the worlds only canola futures and options contracts.
- Canola futures were launched in 1963, and options on canola futures have been available since 1991.
- The size for a canola contract is 20 metric tons. Contract delivery months are January, March, May, July and November.
- The minimum tick fluctuation is 0.10, worth two Canadian dollars per contract, and the daily price limit is $45 per metric ton.
NAFTA and CUSTA both carry their own limitation and tariff structures on canola trading. Traders must be cognizant of Canola price structures if imports increase dramatically during the life of a contract.
Canola Trading News Sources
Multiple organizations offer research, news and information about Canola and the Canola Industry. Some of these include ICE Futures Canada, Canola Council of Canada, Northern Canola Growers Association as well as the U.S. Department of Agriculture and agricultural organizations in Australia and the worlds major edible oil publication, Oil World.
Canola Oil Trading & Investing
Canada is the worlds leader in the production and export of Canola. Once considered only a specialty crop in Canada, canola has become a North American cash crop as well. Canada and the United States produce between 7 and 10 million metric tons of canola seed per year. The United States is also a net consumer of canola oil. Other major customers of canola seed include Japan, Mexico, China and Pakistan. According to the USDA, North Dakota produces more than 90% of the canola in the United States. Canada exports more than 70 percent of its Canola production around the world, making canola trading a truly international market.
Canola Trading Tips
Canola is an edible oil and must compete with all of the other edible oil sources in the world, including soy oil, peanut oil, sunflowerseed oil, etc. So canola traders need to be aware of what is happening in the soybean market especially and, to a lesser extent, the other edible oils. Awareness of consumer preferences for various sources of vegetable oil can also affect the demand outlook.
Canola Trading History
Canola is now the second largest oilseed crop in the world, according to the USDA. Canola has been grown as a crop in the United States since World War II, yet canola is still considered a new crop in the United States because of its relatively short history in U.S. farming. Turnip, rutabaga, cabbage, Brussels sprouts, and many other vegetables are related to the two canola species. In the United States, canola is generally a spring-planted crop. Major production areas include the Northern Plains and the Pacific Northwest with very limited production in other regions.