ICE Canada Review: Canola Follows Soybeans Higher

Domestic crushers were in and out of the canola market during the session, coming forward as large buyers at one point, and then backing away, according to a commission house trader.

He said gains in the Chicago soy complex were providing most of the underlying support to canola, although canola was lagging soybeans to the upside amid ideas that canola had become overpriced compared to beans.

A lack of significant end user demand put some pressure on canola as well, with exporters now looking at C$430 per metric ton in the November contract as a possible pricing target. Some commercial selling was also noted.

With all of the production issues in western Canada already priced into the market, and the weather conditions now looking reasonably favourable for development, there was little need to add to the risk premiums in canola, traders added.

From a technical standpoint, the charts are still pointing higher for canola, with spec buying coming forward at the daily lows, according to a market analyst.

After making large sales earlier in the week, farmer selling pressure in canola was subsiding on Wednesday, providing some support, the analyst added.

About 7,647 contracts traded on Wednesday, which compares with Tuesday when an estimated 8,370 contracts traded. Spreading accounted for about 764 of the contracts traded.

Western barley futures were untraded and unchanged on Wednesday.

Settlement prices are in Canadian dollars per metric ton.