ICE Canola Contracts Climbs As C$ Depreciates

Winnipeg – Canola contracts on the ICE Futures Canada platform were trading at higher levels at midday with the pull-back in the value of the Canadian dollar generating strong support, market watchers said. The significant depreciation of the Canadian currency was said to have stimulated fresh demand for the commodity.

Extremely heavy volumes of trade was evident in canola with speculative funds aggressively bailing out of the nearby May future and into the July contract, brokers said.

"The weak Canadian dollar has resulted in domestic processors returning to the canola market in a big way," a trader said. "Profit margins for crushers have now improved to their highest level in the past month and a half."

The pricing of old export business to Japan and Mexico by commercials was also evident and contributed to the strength displayed by canola, brokers said.

A drop off in the level of hedges coming forward by grain companies also was an underpinning price influence for canola. Traders said producers were now focussing their attention on spring fieldwork instead of marketings.

Support in canola was also coming from concerns about the impact ash that is spewing from a volcano beneath Iceland’s Eyjafjallajokull glacier with have on global agriculture, brokers said. The high-altitude ash cloud forced aviation authorities in Britain and other parts of northern Europe to ground thousands of flights Thursday.

The buying back of previously sold positions by a variety of market participants was also generating some of the strength seen in canola, brokers said.

The upside was limited by the improved soil moisture conditions in western Canada and from the continued prospects of record area being seeded to canola this spring in western Canada.

There were an estimated 27,508 canola contracts traded at 10:48 CDT. Of the contracts traded, 22,168 were spread related.

There were no western barley futures traded as of 10:48 CDT.