ICE Canada Review: Weather Helps Canola

Heavy precipitation across most of the canola growing regions of the Canadian prairies during the weekend sparked ideas of further damage to yield potential, brokers said. Meanwhile, the dry canola growing regions of northern Alberta continued to suffer from the lack of rain, threatening output in that area.

Activity in canola was described as light and choppy with few market participants wanting to establish large positions ahead of Friday’s updated supply/demand reports scheduled to be released by the USDA.

The strength in canola was also encouraged by steady domestic processor demand and the pricing of old export business, traders said.

The slow pace of farmer deliveries into the cash pipeline helped to keep a firm floor under values as did indications that some new canola export business was in the works, brokers said. However, exporters were unable to confirm any new sales of Canadian canola.

Some early buying in canola came from sentiment that the late sell-off in canola during Monday’s session was overdone and that an upward correction was needed.

The early advances seen in CBOT soybean futures also helped to generate some of the upward price momentum.

The upside in canola was limited by overhead technical resistance and the late sell-off seen in CBOT soybeans and soyoil. Firmness in the Canadian dollar and some late day profit-taking also restricted the price gains seen in canola.

Some spreading was evident and helped to bolster the volume total seen in canola.

There were an estimated 6,940 canola contracts traded Tuesday, up from the 2,424 contracts that changed hands during the previous session.

Western barley futures were bid higher but no contracts were traded. On Monday, 42 barley contracts changed hands.