ICE Canada Review: Strong C$ Undermines Canola

The Canadian dollar strengthened above parity with the US dollar Wednesday which caused domestic crushers and export outlets to back temporarily away from the canola market, traders said.

Weakness in canola was also linked to the steady hedge offers from elevator companies as producers continue to price canola in storage, brokers said.

The large global oilseed supply situation, the prospects of record area being planted to canola in western Canada and to soybeans in the US also contributed to the bearish price atmosphere.

Some light chart based selling was also evident and added to the price declines in canola.

The downside in canola was limited by the advances experienced by CBOT soyoil contracts and conflicting reports about the benefits of recent precipitation on soil moisture conditions in parts of the agricultural areas of western Canada, traders said. Some participants felt the precipitation had helped to alleviate some of the dry soil conditions while others said the moisture was not enough.

A good portion of the volume total seen in canola Wednesday was made up of spreads, as fund accounts continued to roll positions out of the nearby May future and into the July or November contracts, traders said.

There were an estimated 20,176 canola contracts traded Wednesday, up from 12,537 during the previous session. Of the contracts traded,18,000 contracts were spread related.

Western barley futures were unchanged and untraded in non-existent activity.

No barley contracts changed hands during the session. On Tuesday, no barley contracts were traded.