ICE Canada Review: Soyoil, Demand Jump Lift Canola

Activity in canola was described by market participants as light and choppy.

The increase in demand from the commercials was said to have come from domestic processors, with improved crush margin profitability said to have spurred the jump in buying, brokers said. They noted that some crushers have tightened up basis levels significantly in order to encourage producers to deliver canola up their driveways.

Additional strength in canola came from the upswing in CBOT soyoil futures, with the advances in CBOT soybeans also an underpinning price influence, traders said.

Canola contracts initially found support from the overnight advances in Malaysian palm oil and in European rapeseed futures.

The buying back of previously sold positions by speculative accounts further supported prices.

The upside in canola however, was limited by the ongoing harvest of a record large soybean crop in Brazil and Argentina as well as to the possibility of a large jump in US soybean acreage this spring.

The strength displayed by the Canadian dollar against other foreign currencies also restricted the advances seen in canola, brokers said.

There were an estimated 7,086 canola contracts traded Wednesday, down from 10,034 during the previous session. Of the contracts traded, 2,590 contracts were spread related.

Western barley futures were steady to higher with the lack of fresh fundamental inputs keeping commercials on the sidelines for most of the session, brokers said. The late advances came in the May future where oversold price sentiment generated some light buying by commercials.

There were 10 barley contracts that changed hands during the session. On Tuesday, 22 barley contracts were traded.