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ICE Canola Firm, But C$ Tempers Upside

| 1 min read

By Phil Franz-Warkentin

By Phil Franz-Warkentin, Resource News International

January 5, 2010

Winnipeg – ICE Canada canola futures were steady to higher in overnight activity, although the strong Canadian dollar limited the upside.

Overnight gains in Malaysian palm oil, European rapeseed, and e-CBOT soybeans, were all providing some support for canola, according to traders. Calls for a higher start to the North American session in soybeans were also supportive.

Speculative buying was expected to provide some support for canola, with the technical signals still trending higher, according to an analyst.

However, after strengthening sharply on Monday, the Canadian dollar continued to post gains relative to its US counterpart on Tuesday. The strength in the currency was tempering the upside in canola, according to traders. A stronger Canadian dollar cuts into crush margins for domestic processors and makes Canadian canola less attractive to export customers.

Relatively favourable crop conditions for South American soybeans could also limit any gains, according to traders.

Steady farmer deliveries in western Canada were also expected to remain a bearish price influence, although cold temperatures this week may limit some of that movement.

About 1,700 canola contracts had traded as of 8:50 CST.

Western barley futures were unchanged and untraded in overnight activity.

Prices in Canadian dollars per metric ton at 8:50 CST:

    Price Change
Canola
  Mar 413.00 up 0.20
  May 419.80 unch
  Jul 426.10 up 1.20
 
Western Barley
  Mar 156.80 unch
  May 158.00 unch