ICE Canada Review: Weather, Technicals Boost Canola

Canola crops across much of western Canada were hit by heavy rainfall over the past few days, creating the need for a larger weather premium then the one already built into the market, said a broker.

The weather concerns helped push canola prices past some nearby technical resistance levels, triggering additional speculative buying, said traders. Gains in Chicago soybeans also provided some underlying support to canola, as did the overnight advances in Malaysian palm oil.

However, the move above C$440 per metric ton in the November contract did leave values open to some profit-taking, which kept prices off their highs for the day by the close.

Increased farmer selling, encouraged by some good basis opportunities in the country, tempered the advances in canola as well, according to a trader.

The recent gains in canola may be causing some end users to back away from the market, which limited the upside. Declining crush margins were also said to be keeping the gains in check.

About 8,524 contracts traded on Wednesday, which compares with Tuesday when an estimated 9,331 contracts traded. Spreading accounted for about 2,016 of the contracts traded.

Western barley futures were untraded and unchanged on Wednesday, as the futures continue to lack any interest on either side of the market. However, cash bids for feed barley continue to show some strength on ideas that production will be down on the year.

Prices are in Canadian dollars per metric ton.