ICE Canola Firm On Tight Cash

Canola saw moderate activity with intermonth spreading accounting for almost half the volume as crushers were buying the spread while exporters were selling it.

The total canola volume was estimated at 9,783 contracts, up from Wednesday’s 6,884 contracts, including an estimated 4,482 contracts involved in the spread trade.

Canola was higher in the overnight market on sluggish selling and the firm tone in the e-cbot soybean market, traders said. Canola continued to see gains as the North American trading session got underway and the Chicago Board of Trade soybean market rallied. However that market turned lower shortly after the opening while canola held onto its gains, ending mostly modestly higher.

Canola drew support from the firm tone in the cash market as a strong export lineup for Sept, estimated at 500,000 to 600,000 metric tons, underpinned the market. Farmer selling is slow and that also helped to support prices.
Cash dealers have indicated that the late crop development and the fact that there are not enough farmer forward contracts to cover demand is accounting for market strength.

Early strength was also attributed to some US weather forecasters predicting frost for western Canada late next week.
Overnight, frost did appear in the western portions of the Peace River district. Crush margins firmed in reaction to the big gains in the CBOT soymeal market, traders said.

Weighing on the market was the weak tone in most CBOT soybean futures, losses in soyoil and the firm Canadian dollar.
Weather forecasts from Environment Canada call for near ideal growing conditions through the weekend and that was also a bearish factor. The lack of fresh significant export demand prompted selling as well.

Crushers were strong buyers with routine exporter demand noted. The selling was mainly commercial with some European hedging of their record large rapeseed crop also evident early in the day, analysts said.

Western barley ended lower in moderate trade. The Oct contract continued to be pressured by liquidation selling by a US commodity index fund.
The Nov contract was pressured by the glut of feed in the market. However end user demand was fairly strong and that limited the weakness in the Nov contract.
"This is the first time in a month I have seen strong end user interest in barley," said a broker.

The total barley volume was estimated at 432 contracts, up from 293 contracts on Wednesday, including an estimated 114 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: