ICE Canada Review: Canola Lower On Hedges, Slow Demand

The increased farmer selling was brought on by the recent strength in the canola market, as producers looked to take advantage of the better prices, said a trader. Firm cash bids were also encouraging more deliveries in the countryside, helping ease any nearby supply tightness, he added.

The farmer selling was only being met by routine demand, with many buyers backing away from the market for the time being, according to traders. While there was some light domestic crusher and exporter pricing providing support, most of that buying interest was on a scale-down basis.

The ongoing weather concerns in western Canada have now largely been priced into the canola market, and conditions were showing some slight improvement, according to market participants. However, there is still enough uncertainty to keep a risk premium in canola. The drought conditions in Europe and the Black Sea region were also providing some underlying support to canola values, said traders.

The firmer tone in CBOT soybeans and soyoil helped underpin canola values on Friday, according to traders.

The charts also continue to point higher for canola, with values still well above major moving averages, according to a market analyst. However, overbought signals and the need for some consolidation before the next leg higher did put some pressure on values on Friday.

About 6,786 contracts traded on Friday, which compares with Thursday when an estimated 7,644 contracts traded. Spreading accounted for about 1,354 of the contracts traded.

Western barley futures were untraded and unchanged on Friday.

Settlement prices are in Canadian dollars per metric ton.