WCE close: Canola lower on slow demand

(Resource News International) — Winnipeg Commodity Exchange grain and oilseed
futures closed Wednesday’s session mostly lower, with small losses in canola prompted
by the continued lack of fresh demand, brokers said.

Canola had an active trade, with intermonth spreading accounting for the bulk of the
volume. Commercials continued to be the main spread traders, with only light commodity
fund activity noted.

The total canola volume was estimated at 19,368 contracts, up from Tuesday’s
17,521 contracts, including an estimated 14,686 contracts that were involved in the
spread trade. Canola options trade was moderate, with 325 January 440 canola traded at
$12.50.

Canola saw a choppy session ending mainly lower in the wake of sluggish
demand. The absence of fresh export activity weighed on the market with the large
visible supplies being held by commercials contributing to the weakness, traders
said. High ocean freight rates, the firm Canadian dollar and ideas that canola is
overpriced in international oilseed markets kept export activity low.

Bearish technical signals and liquidation by “tired longs” also weighed on the
market. Canola losses increased near the close as CBOT soybeans losses increased and
the gains in CBOT soyoil futures faded.

Keeping the losses small for most of the session was the firm tone in Chicago
Board of Trade soyoil futures, slow farmer selling and a weaker tone in the Canadian
dollar. There were also ideas that exporters were preparing for an export tender for
canola. Export sources, however, were unable to confirm the talk and traders felt there
was “more hope behind (the rumour) than actual fact .”

Crushers were the best buyers with exporter buying noted. Commission houses
were noted evening up on both sides of the market in the thin choppy tone. The selling
was mainly commercial with elevator company selling noted.

Some commodity fund liquidation selling was noted in the November contract with
traders pegging fund selling at about 500 contracts. They noted that fresh fund selling sits
at the $425.00 level in the November contract.

Western barley ended mixed in moderate trade with the losses in U.S. grain markets
and sluggish demand undermining values. However, farmer selling was lacklustre and
that kept the decline modest.

An estimated 693 barley contracts changed hands, up from 163 contracts on
Tuesday as the spread volume involved an estimated 514 contracts.

Feed wheat was untraded and unchanged amid a lack of interest.

WCE closing prices, $Cdn per tonne, October 24, 2007.

Spread trade prices. “Volume” represents the number of
spreads.