WCE close: Canola mixed as dollar offsets soy rally

(Resource News International) — Winnipeg Commodity Exchange grain and
oilseed futures closed Monday’s session narrowly mixed, with canola little changed as the
47-year high in the Canadian dollar offset support from the strong upward surge in
Chicago Board of Trade soy complex futures, brokers said.

Canola saw a moderate trade with intermonth spreading by commercials enhancing
the volume. The November/January spread traded beyond full carrying charges, confirming the glut
of canola supplies in Western Canada.

The total estimated canola volume was 12,799 contracts, down from Friday’s
17,960 contracts, as the spread activity involved an estimated 7,470 contracts.

Canola bounced to both sides, ending narrowly mixed as the sharp appreciation by
the Canadian dollar to US$1.05, its highest level since 1960, pressured the market down
despite support inspired by the firm tone in CBOT soy complex values and the move by
crude oil to record highs, traders said.

Crush margins noted some improvement, particularly in the deferred contracts, and
that was supportive.

Also limiting the strength in canola was the absence of fresh export demand and the
large supplies of canola in commercial hands. The inability of elevator company hedges
to attract in significant commercial demand also weighed on the market, analysts said.

Crushers were the best buyers with routine exporter pricing noted. Local and
commission houses appeared on both sides of the market as they were felt to be net
buyers. The selling was mainly commercial with increased elevator company hedge
selling noted.

Western barley futures rallied in light trade, with intermonth spreading accounting
for the bulk of the volume. The firm tone in CBOT corn and slow farmer selling were
supportive, but were offset by talk of rising U.S. corn imports as the Canadian dollar rallies
against the U.S. greenback.

The total barley volume was estimated at 949 contracts, down from 1,734 contracts
on Friday, with 828 contracts involved in the spread trade.

Feed wheat was little changed amid a lack of interest and in low volumes. Traders
noted that the liquidation that has dominated the market for over a month continued
Monday. The total feed wheat volume was estimated at two contracts, up from no volume
on Friday.

WCE closing prices, Canadian dollars per tonne, Oct. 29, 2007

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