ICE Canada Review: Yield/quality downgrades lift canola

Market participants noted that because canola crops in Alberta and Saskatchewan were seen as being immature because of slow growth, the frost will have caused damage to both yields and the quality of the crop. Crops in Manitoba were seen as being more mature, but a frost event could still cause some quality downgrading, brokers said.

Position evening ahead of the weekend was a feature of the activity in canola.

Commodity funds were aggressive buyers of canola during the session, with much of that demand related to the weather situation, brokers said.

The advances in canola were also fueled by the sharp advances seen in CBOT soybean and soyoil futures. Strong gains overnight in Malaysian palm oil and European rapeseed futures had also encouraged some early strength in canola.

Strength in canola was also linked to the concerns about frost damage hurting the oilseed crops in China, traders said.

Steady domestic crusher demand, the pricing of old export business and the pull-back in the value of the Canadian dollar were also seen as underpinning influence in canola, brokers said.

The upside in canola was limited by pre-weekend profit-taking and some elevator company hedge selling. Spreading was a big part of the volume seen in canola.

There were an estimated 21,266 canola contracts traded Friday, up from the 10,403 contracts that changed hands during the previous session. Of the contracts traded, 11,142 were spread related.

Western barley futures were steady to higher with light end-user demand, in the absence of willing sellers, allowing the December contract to be push upwards, brokers said. There were 20 barley contracts traded on Friday. On Thursday, no western barley contracts changed hands.