ICE Canada Review: Spec Buys Aids Canola Gains

New contract highs were established in a number of contracts during the session.

Some position evening ahead of Friday’s grain stocks in all positions report scheduled to be released by Statistics Canada was evident. Some of the volume total seen in canola was associated with index funds finishing off the rolling of positions out of the nearby March canola contract and into the May future, brokers said.

Canola found strong support early in the session from the new contract highs established in Malaysian palm oil activity overnight, traders said. Strength in CBOT soybean and soyoil futures during the North American day session also contributed to the gains seen in canola, traders said.

The pricing of routine export business with Japan by commercial accounts added to the firm tone in canola as did steady domestic crusher demand, brokers said. However, they cautioned that with profit margins for processors taking a downturn, the demand was not as aggressive as it was earlier in the week.

The penetration of technical resistance levels triggered some fresh buying by speculative accounts during the day, traders said. However, at the highs of the session, some of that buying turned into profit-taking, which capped the upside price potential in canola, they said.

Early support in canola was also associated with the absence of farmer deliveries into the cash pipeline. Brokers noted, however, that as canola futures rallied, that selling interest pick up and in turn capped the rally.

The continued upswing in the value of the Canadian dollar was an undermining price influence.

There were an estimated 15,781 canola contracts traded Wednesday, down from the 25,800 contracts that changed hands during the previous session. Of the contracts traded, 7,448 were spread related.

Western barley futures were unchanged and untraded Wednesday. On Tuesday, no western barley contracts changed hands.