WCE close: Canola down on strong loonie

(Resource News International) — Winnipeg Commodity Exchange grain and oilseed
futures closed Wednesday’s session mixed with canola pressured down by the continued
firm tone in the Canadian dollar, brokers said.

Canola saw a moderate trade with only modest amounts of intermonth spreading by
commercials. Activity was described as “dull.”

The total canola volume was estimated at 6,117 contracts, down from Tuesday’s
11,624 contracts, including an estimated 1,600 contracts involved in the spread trade.

Canola futures started the day lower and remained weak throughout the session as
the Canadian dollar soared, touching the US$1.10 level, a near record high level. Two
months ago the Canadian dollar was US95 cents. One broker noted that if the Canadian
dollar was below parity with the U.S. greenback, canola futures would almost be at the
C$500-per-tonne level.

The high dollar has stifled fresh export demand and eroded crush margins despite
the strength in Chicago Board of Trade (CBOT) soyoil futures, analysts said. Contributing to the
weakness was the large canola supplies being held by commercials.

Underpinning the canola market was a slower pace to farmer selling.

Crushers were the best buyers early, with routine exporter pricing also noted.
Speculators were sellers today, taking profits, while elevator company hedging was also
evident in the trade.

Western barley futures posted losses in light trade as the lack of end user demand
and the firm Canadian dollar weighed on prices, brokers said. Commercials dominated
the small trade with the market supported by the lack of farmer selling. The market
generally ignored the gyrations in the U.S. corn market as it started the day lower.

The total barley volume was estimated at 96 contracts, down from Tuesday’s 199
contracts.

Feed wheat edged up amid a lack of farmer selling with short covering accounting
for the small gains in the thin trade. Traders felt the activity continued to be liquidation
trade as open interest continues to fall.

Feed wheat activity was estimated at 22 contracts, up from no volume on Tuesday.

WCE closing prices, Nov. 7, 2007, Canadian dollars per tonne.

WCE spread trade prices, in Canadian dollars. “Volume” represents the number of
spreads.