ICE Canada Grain/Oilseed Review: Canola Mixed, Acreage Bearish

By Dwayne Klassen, Resource News International

March 9, 2009

Winnipeg – Canola contracts on the ICE Futures Canada platform finished the day mixed. A drop off in commercial demand and increased acreage ideas sparked some of the selling seen across the board, market watchers said. Firmness in the cash market and weakness in the Canadian dollar provided some of the support seen in canola during the session.

Activity in canola was on the lighter side with a number of market participants taking to the sidelines to await the outcome of Wednesday’s latest round of supply/demand tables from the USDA.

Canola futures had traded at mainly higher levels leading up to the close with some of the upward price action tied to early commercial demand and the continued reluctance of producers to deliver into the cash pipeline in western Canada, traders said. Much of the early commercial interest was said to be covering new export business. However, at the close that interest ran out of steam, allowing the sell-orders that hit the market to easily push values down.

Some of the selling that hit the market late came from a variety of sources. Late day hedging by line companies was also evident, brokers said.

Early strength in canola had also been attributed to the advances posted in CBOT soybean and soyoil values. However, when soybeans turned mixed at the close the gains in canola were also eroded. The downturn in CBOT soyoil values also influenced some price weakness in canola.

Domestic crushers were early buyers of canola during the day with some early strength associated with the gains seen overnight in Malaysian palm oil and Matif rapeseed values, traders said.

Some of the selling that surfaced in canola Monday was linked to the record acreage forecast from the market analysis division of Agriculture and Agri-Food Canada late on Friday.

Ag Canada estimated seeded area to canola in the spring of 2009 at a record 17.235 million acres. This surpassed the agency’s January forecast of a record 16.802 million acres and compares with the current record of 16.159 million seeded in 2008.

There were an estimated 4,771 canola contracts traded during Monday’s session, down significantly from 13,539 during the previous session. Of the contracts traded Monday, 1,764 were spread related.

Western barley futures were unchanged to higher with light commercial demand in the absence of willing sellers, allowing some contracts to move up, traders. Spreading was a feature of the activity.

An estimated 31 barley contracts changed hands during the session. On Friday, 28 barley contracts were traded. Of the contracts traded Friday, 30 were spread related.