ICE Canada Review: Supply Tightness Underpins Canola

Spreading was a big feature of the activity in canola with commercials and commission houses selling the nearby contracts and buying the deferred futures. That spreading had resulted in nearby canola contracts trading at lower levels for a good part of the day and the deferred futures at higher prices, brokers said.

Some evening up of positions ahead of the weekend was also evident in canola.

Some of the early weakness seen in canola was tied to profit-taking and a pick up in elevator company hedge selling, traders said. The liquidation of commodity fund positions also sparked the some of the early downward price action seen in the nearby contracts.

Some of the support in canola came from steady domestic crusher demand and the pricing of routine export business.

The stocks in all positions report from Statistics Canada Friday morning also provided some support for canola futures with the 8.242 million metric ton stocks estimate as of December 31, coming in tighter than expected. Market participants explained that the smaller than anticipated supply revealed strong domestic and export usage of the commodity. At the same time, a year ago, canola stocks on farm and in commercial position totalled 9.437 million tons.

All canola contracts were able to move higher near the close, when CBOT soybean values moved off their lows of the day and CBOT soyoil futures turned upwards, traders said.

There were an estimated 22,741 canola contracts traded Friday, up from the 15,865 contracts that changed hands during the previous session. Of the contracts traded, 15,648 were spread related.

Western barley futures were untraded Friday, although some contracts were arbitrarily bid higher. On Thursday, no western barley contracts changed hands.