ICE Canada Review: Position Rolling Aids Canola Volume

A good chunk of the volume total experienced by canola was believed to be the rolling of positions out of the January future and into the March contract by the major index fund accounts through the use of spreads, brokers said.

Position evening ahead of the crop production report from Statistics Canada on Friday was also a feature of the activity.

Canola contracts found good support throughout the day from Local and commission house demand, which was spurred by sentiment that prices were undervalued in comparison to the other oilseed markets, traders said.

Additional support in canola came from steady demand from the domestic sector, especially as crush margins continue to sit at profitable levels, brokers said. The pricing of old export business to Japan and Mexico also helped to spur some of the price advances.

A drop off in the level of farmer deliveries into the cash pipeline underpinned canola futures as did concerns about the dry growing conditions in the soybean producing regions of Brazil and Argentina, traders said.

Early strength in canola was also derived from the advances seen overnight in Malaysian palm oil and European rapeseed futures.

The advances in canola were restricted in part by the lack of fresh export demand being put on the books and the global uncertainty tied to the euro-zone debt crisis. Ideas that Friday’s crop production survey from Statistics Canada will reveal higher than anticipated canola output during the 2010/11 (Aug/Jul) crop year, also slowed the price gains.

There were an estimated 21,826 canola contracts traded Tuesday, up from the 15,143 contracts that changed hands during the previous session.

Western barley futures were steady to higher with the unloading of contracts by commercials accounting for the activity in the nearby December contract, traders said.

Western barley futures saw 20 contracts change hands on Tuesday. No western barley contracts were traded on Monday.