ICE Canola Firms On Slow Farmer Selling

Canola saw an active trade with intermonth spreading augmenting the volumes.

The total canola volume was estimated at 15,5745 contracts, down from Thursday’s 18,659 contracts, including an estimated 9,068 contracts involved in the spread trade.

Canola was narrowly mixed in the overnight session with some support tied to the firm tone in international vegetable oil markets. Canola declined as the North American trading session got underway and the US soy complex saw losses. However, canola worked its way higher throughout Friday’s session climbing back to small gains at the close.

Canola was under pressure from the weakness in Chicago Board of Trade soy complex futures, the firm Canadian dollar and Thursday’s Statistics Canada crop report which pegged the 2009 canola crop at 11.8 mln metric tons, the second largest canola crop on record.

The lingering uncertainly about Chinese demand for Canadian canola also weighed on prices.
Today in Shanghai, Canada’s Prime Minister Stephen Harper stated that China’s embargo against the import of Canadian canola due to Blackleg was still on describing it as a protectionist measure

Trade sources have indicated that a vessel was nominated yesterday by Viterra to carry canola to China, but they indicated that Viterra did not have an import certificate yet from China and that the ship likely had a optional destination of Pakistan if the company was unable to get a Chinese import certificate.

However, giving strong support to the market was the lack of farmer selling as they wait for the new tax year and the very strong crush margins. The Canadian Oilseed Processors Association today reported that the weekly canola crush had seen a large jump with capacity utilization rising to 80.7% from 74.2% last week.

Crushers were the best buyers with exporters routine buyers. Commercials accounted for the bulk of the selling.

There was some speculative buying as well in the market.
"Some of the speculators aren’t sure why they’re buying except that canola doesn’t seem to want to go down", said a broker.

Western barley ended mixed with most contracts lower in light to moderate trade. The lack of country movement and light feed lot buying gave modest support to the Jan contract. Most prices were generally pressured down by weakness in the cash market where prices are about C$10 per metric ton under futures values, brokers said.

The total barley volume was estimated at 281 contracts, up from Thursday’s 90 contracts.

Prices are in Canadian dollars per metric ton: