Canola Futures
The concept of risk management was developed in the United States during the mid-19th century and was founded on agricultural products such as soybeans, soy oil, soy meal, palm oil, corn, wheat, sugar, coffee, cocoa, and orange juice, Some of these products are derived from grain. Grain is used throughout the world in its processed and unprocessed form. Not only does it feed and nourish billions of families, but it also feeds livestock, poultry, and pets. Moreover, for centuries, a multitude of grain by-products have been used in beauty products, an industry that has experienced much growth in recent years.
Canola grain is a Canadian crop developed from rapeseed by Canadian researchers. Roughly thirteen million acres of canola are seeded each year. The Canola Council of Canada manages thirteen processing plants in five provinces and employs over 2,800 people in highly skilled jobs. The industry generates more than six billion dollars annually to the Canadian economy.
With the continuous increase in global population, demand for grain, like canola, and grain by-products has escalated. However, natural disasters and unexpected weather changes have a major impact on supply, causing significant price movements in the grain market. MF Global implements innovative risk management strategies such as timely order execution, and provides 24 hour access to the global grain market, which offers information on corn, wheat, oats and rice.
Investing in Canola Futures
Agricultural futures (like canola) are used by farmers to hedge their crops; thus they are used mainly to lower risk. Investors, who know how hedge stocks work and how to interpret market signals such as basis, can do well in crop marketing.
When used in a controlled manner, the futures market is less risky than cash marketing.
The Canola Futures contract is based on 20 tons. The futures trade usually occurs in multiples of 100 tons, although it is possible to trade smaller lots of 20 to 40 at a time.
Canola Futures can be used to judge price. The buying and selling is done on speculation by non-farm investors, representatives of trading companies, or farmers. Speculators help to increase volume of trade, which is critical to the function of the futures market.
Having access to the latest information, and having your orders executed immediately, is an essential risk management tool in the volatile canola futures sector, where prices often fluctuate due to natural disasters, extreme weather conditions, as well as other unpredictable circumstances.
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