ICE Canada Review: Canola follows outside oilseeds up

New highs were established in Malaysian palm oil and European rapeseed futures overnight, which helped to generate a firm price floor under canola, brokers said.

Strength in CBOT soybean and soyoil values Friday helped to augment the upward price momentum seen in canola.

Additional strength in canola came from fresh speculative buying, some of which was encouraged by friendly chart signals, brokers said.

The advances in canola were also linked to the concerns over the dry growing conditions in the soybean producing area of South America, traders said.

Steady domestic processor demand, amid favourable crush margins also influenced the upward price action in canola.

Canola values did suffer an early price setback after Statistics Canada released its much awaited crop production report.

The government agency pegged 2010/11 (Aug/Jul) canola production in Canada at 11.866 million metric tons, which was above the October projection of 10.430 million and surpassed pre-report expectations that ranged from 10.40 million to 11.50 million tons. In 2009/10, Canada’s canola output totaled 12.417 million tons.

The upside in canola was tempered by the general firmness of the Canadian dollar, which was weaker in early Friday afternoon but well within distance of hitting parity with the US currency, brokers said.

Some elevator company hedge selling ahead of the weekend and profit-taking at the highs, also restricted some of the price advances experienced by canola, traders said.

Spreading was a feature of the activity in canola and helped to augment the volume total.

There were an estimated 24,409 canola contracts traded Friday, up from the 14,601 contracts that changed hands during the previous session. Of the contracts traded Friday, 14,860 were spread related.

Western barley futures were untraded, but bids in the market resulted in some values being pushed upwards. On Thursday, no western barley contracts changed hands.