By Dwayne Klassen, Commodity News Service Canada

Winnipeg – August 23/12 – CNS – Canola contracts on the ICE Futures Canada platform were trading at higher price levels at 10:29 CDT Thursday with continued fall out from the smaller than anticipated production forecast from Statistics Canada on Wednesday accounting for the upward momentum, market watchers said.

Statistics Canada in its first crop production survey for the 2012/13 (Aug/Jul) crop year estimated Canadian canola output at 15.4 million metric tons. This fell below pre-report expectations that ranged from 15.5 million to as high as 17.0 million tons. Canola output in 2011/12 totalled 14.2 million tons.

Additional support in canola came from a pick up in commercial demand. Some of the fresh interest was said to be covering requirements for domestic processors, given that profit margins for the crushers have improved recently, brokers said.

Some of the commercial interest was also said to be export related, with both old and new business being covered, traders said. They noted there was speculation of fresh Chinese interest in Canadian canola, but confirmation of any new sales was not available.

Early strength in CBOT soybean and soyoil values had also influenced some buying in canola, brokers said.

Adding to the bullish sentiment in canola was the pull-back in the value of the Canadian dollar and some chart-based speculative buying.

The upside in canola was tempered by the taking of profits and by the losses posted overnight in Malaysian palm oil and European rapeseed futures. Concerns that farmer deliveries of canola will increase significantly in the near term also slowed the upside price move by canola, traders said.

As of 10:29 CDT, about 4,647 canola contracts had traded.

Milling wheat, durum and barley were untraded and unchanged.

Prices in Canadian dollars per metric ton at 10:29 CDT: