Canola is a genetic variation of rapeseed developed by Canadian plant breeders specifically for its nutritional qualities and its low level of saturated fat. The term Canola is a contraction of “Canadian oil.” The history of canola oil begins with the rapeseed plant, a member of the mustard family. The rape plant is grown both as feed for livestock and birdfeed. For 4,000 years, the oil from the rapeseed was used in China and India for cooking and as lamp oil. During World War II, rapeseed oil was used as a marine and industrial lubricant. After the war, the market for rapeseed oil plummeted. Rapeseed growers needed other uses for their crop, and that stimulated the research that led to the development of canola.
In 1974, Canadian plant breeders from the University of Manitoba produced canola by genetically altering rapeseed. Each canola plant produces yellow flowers, which then produce pods. The tiny round seeds within each pod are crushed to produce canola oil. Each canola seed contains approximately 40% oil.
Canola oil is the world’s third largest source of vegetable oil accounting for 13% of world vegetable oils, following soybean oil at 32%, and palm oil at 28%. The rest of the seed is processed into canola meal, which is used as high protein livestock feed.
The climate in Canada is especially suitable for canola plant growth. Today, over 13 million acres of Canadian soil are dedicated to canola production. Canola oil is Canada’s leading vegetable oil. Due to strong demand from the U.S. for canola oil, approximately 70% of Canada’s canola oil is exported to the U.S. Canola oil is used as a salad oil, cooking oil, and for margarine as well as in the manufacture of inks, biodegradable greases, pharmaceuticals, fuel, soap, and cosmetics.
The Canola contract trades at the Intercontinental Exchange (ICE). The electronic futures contract trades from 7:00 PM CT to 1:15 PM CT, Sunday through Friday. The market closes Friday afternoon and re-opens Sunday evening.
One Canola futures contract is 20 tonnes. The most common contract symbol is RS.
The previous settlement price (February 25, 2014) for May 2014 Canola futures was 425.0, or CAD $85,000 per contract. The pricing unit is in cents per tonne and in Canadian Dollars. A price increment or “tick” is CAD $0.10/tonne (CAD $2.00/contract). The next tick after 425.0 upward is 425.1 followed by 425.2. Therefore, a price move from 425.0 to 426.0 is CAD $20.
The performance bond or initial margin requirement to initiate one futures contract position is $572 (as of August 17, 2015). To control that futures position going forward the maintenance margin becomes $520 (as of August 17, 2015).
The Daily Price limit is CAD $30.00/tonne above or below previous settlement and expandable to CAD $45.00/tonne, followed by CAD $60.00/tonne. For example, if the market closes at limit bid, or 455.0, on Wednesday, February 26, 2014, the next session’s Daily Price Limit would increase to CAD $45.00/tonne. If the following trading session fails to close at limit, the next session’s Daily Price Limit reverts to CAD $30.00/tonne.
The Canola futures contract month listings are January (F), March (H), May (K), July (N), and November (X).
The futures contract’s Last Trading Day (LTD) is the business day prior to the 15th calendar day of the contract month. The May 2014 Canola futures contract LTD is May 14, 2014 for example. The First Notice Day (FND) is one trading day prior to the first delivery day or first trading day of the delivery month.
This contract trades in Canadian dollars, so it’s generally accounted for separately in trading accounts. Be aware of Canadian holidays as the Canola market may be closed or trade shortened hours.
Visit www.danielstrading.com for additional contract specifications and market information regarding Canola futures market.
Sources:
www.theice.com
www.barchart.com
Comprehensive Grain & Oilseed Futures Kit!
Whether you are new to the agricultural commodities industry or a seasoned trader, it is important to have a solid understanding of the markets to assist you and your trading strategies. Through our comprehensive futures kit, you will gain a complete overview of the grain & oilseed markets!
Risk Disclosure
THIS MATERIAL IS CONVEYED AS A SOLICITATION FOR ENTERING INTO A DERIVATIVES TRANSACTION.
THIS MATERIAL HAS BEEN PREPARED BY A DANIELS TRADING BROKER WHO PROVIDES RESEARCH MARKET COMMENTARY AND TRADE RECOMMENDATIONS AS PART OF HIS OR HER SOLICITATION FOR ACCOUNTS AND SOLICITATION FOR TRADES; HOWEVER, DANIELS TRADING DOES NOT MAINTAIN A RESEARCH DEPARTMENT AS DEFINED IN CFTC RULE 1.71. DANIELS TRADING, ITS PRINCIPALS, BROKERS AND EMPLOYEES MAY TRADE IN DERIVATIVES FOR THEIR OWN ACCOUNTS OR FOR THE ACCOUNTS OF OTHERS. DUE TO VARIOUS FACTORS (SUCH AS RISK TOLERANCE, MARGIN REQUIREMENTS, TRADING OBJECTIVES, SHORT TERM VS. LONG TERM STRATEGIES, TECHNICAL VS. FUNDAMENTAL MARKET ANALYSIS, AND OTHER FACTORS) SUCH TRADING MAY RESULT IN THE INITIATION OR LIQUIDATION OF POSITIONS THAT ARE DIFFERENT FROM OR CONTRARY TO THE OPINIONS AND RECOMMENDATIONS CONTAINED THEREIN.
PAST PERFORMANCE IS NOT NECESSARILY INDICATIVE OF FUTURE PERFORMANCE. THE RISK OF LOSS IN TRADING FUTURES CONTRACTS OR COMMODITY OPTIONS CAN BE SUBSTANTIAL, AND THEREFORE INVESTORS SHOULD UNDERSTAND THE RISKS INVOLVED IN TAKING LEVERAGED POSITIONS AND MUST ASSUME RESPONSIBILITY FOR THE RISKS ASSOCIATED WITH SUCH INVESTMENTS AND FOR THEIR RESULTS.
TRADE RECOMMENDATIONS AND PROFIT/LOSS CALCULATIONS MAY NOT INCLUDE COMMISSIONS AND FEES. PLEASE CONSULT YOUR BROKER FOR DETAILS BASED ON YOUR TRADING ARRANGEMENT AND COMMISSION SETUP.
YOU SHOULD CAREFULLY CONSIDER WHETHER SUCH TRADING IS SUITABLE FOR YOU IN LIGHT OF YOUR CIRCUMSTANCES AND FINANCIAL RESOURCES. YOU SHOULD READ THE "RISK DISCLOSURE" WEBPAGE ACCESSED AT WWW.DANIELSTRADING.COM AT THE BOTTOM OF THE HOMEPAGE. DANIELS TRADING IS NOT AFFILIATED WITH NOR DOES IT ENDORSE ANY TRADING SYSTEM, NEWSLETTER OR OTHER SIMILAR SERVICE. DANIELS TRADING DOES NOT GUARANTEE OR VERIFY ANY PERFORMANCE CLAIMS MADE BY SUCH SYSTEMS OR SERVICE.
GLOBAL ASSET ADVISORS, LLC (“GAA”) (DBA: DANIELS TRADING, TOP THIRD AG MARKETING AND FUTURES ONLINE) IS AN INTRODUCING BROKER TO GAIN CAPITAL GROUP, LLC (GCG) A FUTURES COMMISSION MERCHANT AND RETAIL FOREIGN EXCHANGE DEALER. GAA AND GCG ARE WHOLLY OWNED SUBSIDIARIES OF STONEX GROUP INC. (NASDAQ:SNEX) THE ULTIMATE PARENT COMPANY.
