WCE close: Canola down on weak CBOT soybeans

(Resource News International) — Winnipeg Commodity Exchange grain and
oilseed futures closed Tuesday’s session mainly lower with canola lower in a choppy
trade in the wake of the big slide down in Chicago Board of Trade soy complex futures,
brokers said.

Canola saw an active trade with intermonth spreading augmenting activity, as
commercials were just “cleaning up things” to bring their futures positions in line with
exchange position limits for a cash month.

The total canola volume was estimated at 13,510 contracts, up from Monday’s
12,799 contracts, including an estimated 6,964 contracts involved in the spread trade.

Canola saw a choppy trade bouncing to both sides throughout the session with
values ultimately sent to losses by the big slide down in CBOT soy complex values.
Evening-up ahead of month-end was noted. The lack of fresh demand from the export
sector also weighed on prices.

However, canola losses were much smaller than the U.S. market, as traders noted that
canola did not rally with CBOT soybeans on Monday and did not need to see as large a
retracement today. Canola moved to its lows at the close as CBOT soybean losses
intensified.

Also underpinning the market was a weaker tone to the Canadian dollar and ideas
that canola was oversold and needed a correction to the upside, analysts said.

Crushers were the best buyers, with only routine exporter pricing evident. Locals
and commission houses appeared on both sides but were net sellers. Commercials
dominated the selling, although elevator company hedging was notably lighter as farmer
selling has slowed as farm gate bids have eroded, said a cash dealer.

Western barley closed lower in step with losses in CBOT corn with the lack of end-user demand contributing to the price slide, brokers said.

Activity was heavy and dominated by index funds rolling their December contracts into
the March contract ahead of the end of the month.

Commercials dominated much of the outright trade as the total barley volume was
estimated at 6,633 contracts, up from Monday’s 949 contracts. The total estimated spread
volume included 5,894 contracts.

Feed wheat posted losses in light trade as the weak tone in U.S. wheat futures
pressured values lower. Continued liquidation selling weighed on the market. The total
estimated volume was 603 contracts, up from just two contracts on Monday.

WCE closing prices, Canadian dollars per tonne, Oct. 30, 2007.

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