Canola Futures: Investing ? GeoNomic Investing

Canola futures trade on the InternationalcontinentalExchange. The canola futures contract is the world benchmark for canola trading.?The canola futures contract is often used as a price barometer; ?producers and buyers monitor canola futures prices as a reference for cash canola prices.? In addition to providing a reference to cash contracts, the canola futures contracts are used as a price risk management tool to protect from price fluctuations. Canola crushers, exporters and foreign buyers use these contracts regularly.?A canola producer may also participate in a futures contract through using a broker, known as a Registered Futures Commission Merchant.

History

The futures contract for rapeseed began to trade on the Winnipeg Commodity Exchange (WCE) in 1963. As canola replaced rapeseed, the WCE replaced rapeseed with canola in the futures market. Canola futures are the most actively traded commodity on the WCE, known as ICE Futures Canada (ICEFC) since 2007.

Contract Specifications

Quantity:?One contract is equivalent to 20 tonnes of canola. Trades often are made in multiples of five contracts.

Currency:?Canadian Dollars

Delivery months:?January, March, May, July, November

Pricing basis:?Free-on board points in the Par region.

Deliverable specifications:?Contract deliverable grades are based on primary elevator grade standards as established by the Canadian Grain Commission (CGC).

Trading hours:?There is overnight trading at ICEFC. One day?s trading, all in Central Time, is:

Pre-open ? 7:00 p.m. (order entry only)

Open ? 8:00 p.m.

Close ? 1: 15 p.m. (the next day)

First Delivery Day:?First Trading Day of the delivery month.

Last Trading Day:?Business day preceding the 15th calendar day of the delivery or contract month.

Last Delivery Day:?Second business day after the last trading day.

Minimum Price Fluctuation:?$0.10/tonne. ($2.00/contract)

Regular Daily Price Limit:?$45/tonne.?See ICE Futures Canada Rule 8 for details on Expanded Daily Price Limits.

Expanded Daily Price Limit:?Daily price limit expands to $60/tonne the next trading day if any two traded contract months close limit up or limit down. The limit returns to $45/tonne, from the $60/tonne level, if fewer than two contracts trade the $60/tonne limit up or limit down.

Speculative Position Limit:?1000 contracts, in spot month only.

Margin Requirement: The initial margin is the amount required in an account deposited with the RFCM to open a futures position. The standard initial margin for canola, is determined by the ICEFC. The initial margin varies from time to time depending on price volatility.

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