ICE Canada Review: Canola Recovers On Fresh End-User Demand
| 2 min read
| By Dwayne Klassen, Commodity News Service Canada |
| February 23, 2011 |
| Winnipeg – Canola contracts on the ICE Futures Canada platform finished Wednesday’s session with modest to strong advances with the surfacing of some fresh end-user demand and the rally in the CBOT soybean complex behind the upward price momentum, market watchers said.
Canola values had actually started Wednesday’s session on the defensive with carry-over selling from Tuesday’s limit down price slide generating some of the early price weakness. Losses overnight in Malaysian palm oil and European rapeseed futures had also stimulated some of the early selling in canola. Nervous speculators were some of the featured sellers early in the session. However, at the lows of the day, domestic crusher demand resurfaced, slowing the price drop in canola and in fact helped to start the upward price move. Some of the demand in canola also came from the commercial sector, with a number of companies were covering previously conducted export business to Japan, brokers said. CBOT soybean and soyoil values also began to rally shortly after the opening of the North American trading session, further encouraging the price gains seen in canola. As the advances in CBOT soybeans and soyoil picked up steam, the rally in canola also expanded, brokers said. Weakness in the Canadian dollar during the day had also influenced some of the upward price action in canola. Traders also attributed some of the price strength in canola from the rally seen in global crude oil, with the sharp jump in those values encouraging additional biodiesel output. Canola is a key ingredient used in the biofuels sector. Additional support in canola came from the need to encourage western Canadian producers to plant the crop this spring, traders said. Some of the upward price action in canola was restricted by panic selling by producers, who were trying to take advantage of some fairly good cash bids in the commercial pipeline, brokers said. Spreading was a big part of the volume total seen in canola Wednesday. There were an estimated 32,126 canola contracts traded Wednesday, up from the 27,471 contracts that changed hands during the previous session. Of the contracts traded, 28,976 were spread related. Western barley futures were untraded Wednesday with no contracts changing hands.
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