ICE Canola Firm As Exports Offset Weak Soy

Canola saw a very active trade with good levels of intermonth spreading evident.

The total canola volume was estimated at 27,121 contracts, up from 12,295 contracts on Wednesday. "This was the best one day volume we’ve seen since April", said a trader.

Canola fell sharply in the overnight session breaking below the C$400 in the Nov contract but quickly rebounded when selling dried up and buying came forward. The market drew some support from the gains in e-cbot soybean futures. Canola held onto small gains as the North American trading session opened and the CBOT soy complex posted small gains. However, canola then followed the US market down, but did not see the big losses that occurred in US soy, traders said. Canola ended narrowly mixed with most contracts higher.

Canola was pressured down by the big losses in the CBOT soy complex futures, increased farmer selling, as producers make space for the new crop, and the favourable growing conditions forecast through next week. Weather forecasters say that the first chance of frost is the middle of next week in central and northern Alberta.

Bearish technical signals also weighed on the market as did ideas that the better weather is improving yields for canola, traders said.

However, the market was supported by heavy speculative short covering triggered when the canola market dropped to $398.80 and then rebounded. Export demand also appeared as canola is favorably priced against European rapeseed after the Canadian market drop of $25 per metric ton this week, grain trade sources said. Traders felt that either Pakistan or China had picked up at least 1 cargo of canola. Traders were describing the support at the $400 level in the Nov. contract as "formidable".

Exporters were the best buyers with speculative short covering and crusher buying also evident. The selling was commercial with steady elevator company hedging noted. Commodity funds were thought to have added to their short position in the Nov contract today.

Western barley rallied in light trade. The Nov contract was supported by the discount of the futures contract to the southern Alberta cash market. However brokers feel the two markets are now in line.
Commercials were the main traders.

The total barley volume was estimated at 197 contracts, up from Wednesday’s 184 contracts.

Prices are in Canadian dollars per metric ton: