ICE Canada Review: Short-covering Limits Canola Losses

The large global oilseed supply situation and the potential for increased canola plantings in western Canada this spring prompted the selling that took the deferred months down, brokers said.

Activity in canola was described as extremely volatile with position evening ahead of the weekend a feature of the trade.

Canola futures had traded at mainly lower levels for the bulk of the day with some of the earlier selling encouraged by the declines experienced by CBOT soybean and soyoil values, traders said.

A pick up in elevator company hedge selling also helped to undermine canola values earlier in the session, traders said. The steady farmer deliveries reflected ideas that US soybean values, and subsequently canola, will push lower and producers were trying to price some quantities before this drop occurs, they said.

A late day rally in CBOT soybean futures also helped to generate some support in the nearby canola contracts, brokers said.

Underlying support in canola also came from steady demand from the domestic processing sector as well as from exporters.

Good speculative interest for Canadian canola, as participants exited positions in currencies, crude oil and metals in favour of grains and oilseeds, also helped to provide a firm floor for values, brokers said.

Strength also came from sentiment that Canadian canola continues to be attractively priced on the world market in comparison to other oilseeds, brokers said.

There were an estimated 9,495 canola contracts traded Friday, up from 8,294 during the previous session. Of the contracts traded, 5,475 contracts were spread related.

Western barley futures were little changed in non-existent activity, traders said.

There were no barley contracts that changed hands during the session. On Thursday, 5 barley contracts were traded.