ICE Canola Benefitting From Spillover Support

Cautious optimism that the global economy may be on the road to recovery was encouraging advances in equity and commodity markets and helped to lift crude oil futures by nearly US$4.00 a barrel.

The bullish tone was spilling over into grains and oilseed markets and helped to lift canola, traders said.

Higher prices in the CBOT soy complex, despite some minor profit-taking that eventually emerged, were underpinning canola contracts as well.

According to trade sources, there was good buying interest from both commercials and commodity funds on Thursday, despite the significant climb in the value of the Canadian dollar.

New crop canola contracts were also being lifted by ideas that western Canadian canola and US soybean acreage this spring will not be as high as some estimates have suggested.

"The USDA [plantings] report came out with lower than expected bean acres. Now as people are starting to talk to seeding representatives and things like that, they’re also getting the idea that canola acreage won’t be as large as earlier anticipated," said a Winnipeg broker.

The upside in canola was being tempered somewhat by farmer selling, which picked up in response to the market’s rally.

The canola market was seeing much higher volumes than normal on Thursday although a significant portion of the activity was tied to inter-month spreading. As of 11:20 CDT, 17,661 canola contracts had changed hands, of which 14,684 were spread-based.

Western barley futures were higher, with that market also seeing more volume than it has in recent sessions. There were 180 barley contracts traded as of 11:20 CDT but of that amount, 178 were spread-related.

Prices in Canadian dollars per metric ton at 11:20 CDT