Canola Firm On Crusher Demand

Canola activity was heavy with intermonth spreading by commodity funds and commercials accounting for the bulk of the volume.

The total canola volume was estimated at 20,264 contracts, up from Tuesday’s 19,803 contracts, including an estimated 12,784 contracts involved in the spread trade.

Canola futures were a bit lower in the overnight session as increased country movement and technically based selling sent the market lower despite strength in the international vegetable oil markets. Canola continued to see small losses as the North American trading session got underway and Chicago Board of Trade soybean futures posted small losses. However, as CBOT soy complex values firmed up canola was pulled higher with strong demand contributing to the gains. Canola ended modestly higher.

Canola was supported by strong commercial demand as crush margins have hit their highest level in almost 5 years. Friendly technical signals prompted speculative buying. Farmer selling slowed as cash dealers indicated that the recent strength in the market has "cleaned out everyone who wanted to sell at C$9.50/bu or C$9.60/bu".

A strong export lineup for the next month to 6 weeks has maintained solid commercial demand with commercials wanting to have enough supplies on hand, as farmer selling traditionally slows during planting season.

The retreat in CBOT soybeans from gains to a narrowly mixed close did trim canola back to modest gains by the close, but the market managed to hold onto to its advances.

Crushers were strong buyers with speculative buying also noted.
Commodity funds were light buyers early in the day adding to their long position in canola. Routine exporter buying was also noted. The selling was mainly commercial with elevator company hedging slowing as "farmers are now waiting for $10.00/bu", said a cash dealer.

Western barley ended lower in light commercial trade with intermonth spreading boosting the volumes. The lack of farmer selling gave some support but was offset by sluggish demand in the small lackluster activity, said brokers.

Western barley volumes were estimated at 220 contracts, up from 210 contracts on Tuesday, including an estimated 200 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: