Canada Grain/Oilseed Review: Canola Boosted By Exports

Canola saw a very active trade with intermonth spreading by commodity funds and commercials accounting for the larger volumes.

The total canola volume was estimated at 27,185 contracts, up from Wednesday’s 21,650 contracts, including an estimated 20,368 contracts involved in the spread trade.

Canola was higher in the overnight market in step with strength in international oilseed and vegetable oil prices. Canola extended its gains as the North American trading session opened and the CBOT soy complex surged sharply higher. Canola held onto its gains, closing moderately higher.

Canola drew support from the advances in the CBOT soy complex futures with some buying also linked to bullish technical signals. Gains in crude oil and enthusiasm generated by the successful conclusion of the G-20 meeting in London also helped to lift prices. Export activity was supportive as traders indicated that Mexico and Pakistan have been in the market over the past two sessions.

Capping the advance and keeping canola’s rally smaller than the US soy complex was the very strong Canadian dollar and increased farmer selling as futures rose. Cash bids in selected locations in Alberta are once again approaching the C$10.00/bu level. Heavy pricing of deferred delivery contracts by farmers was triggered by May and July futures climbing above the $430 per metric ton level.

Exporter, crusher and commodity fund buying was evident in Thursday’s trade. Analysts estimated fund buying at 1,000 to 1,500 July contract as they are going long the canola market. The selling was comprised of mainly commercial offerings with elevator company selling evident on a scale up.

Western barley posted strong gains in light trade as intermonth spreading augmented volumes. The gains in CBOT corn futures and the fact that cash market bids are $30.00 per metric ton over futures accounted for the rally, brokers said.

The total barley volume was estimated at 188 contracts, down from 773 contracts on Wednesday, including an estimated 178 contracts involved in the spread trade.