ICE Canada Review: Canola Strengthens Following Soybeans

Advances in the CBOT soy complex provided some spillover support to canola, helping encourage the buying interest, according to traders who said much of the activity was tied to large fund traders who were positioning themselves ahead of USDA supply/demand reports due out on Wednesday.

A weaker tone in the Canadian dollar provided some further support for canola, helping crush margins see some improvement, according to traders.

A lack of farmer selling underpinned canola as well, with most producers on the sidelines for the time being. A broker said that any producers who had any canola they were looking to sell to start the New Year had already done so.

Gains in the outside crude oil market and European rapeseed futures, provided further support.

Precipitation in Argentina over the weekend helped improve crop conditions there, tempering the upside in the oilseed markets, said a broker. However, he added that crops in the country still need more moisture, and the weather issues there were supportive overall.

Some uncertainty that the gains in CBOT soybeans may be overdone ahead of the USDA data served to limit the upside in canola, as Canadian traders took a more cautious ‘wait-and-see’ stance ahead of the reports.

Technical resistance was also met, as canola futures neared the contract highs set last week, but failed in any attempts to break above that resistance.

About 17,507 contracts were traded on Monday, which compares with Friday when an estimated 11,831 contracts changed hands. Spreading was a feature, accounting for 9,790 of the contracts traded.

Western barley futures were untraded and unchanged.

Settlement prices are in Canadian dollars per metric ton.