ICE Canola Firm On US Soy Gains

Canola saw a very light trade with very small amounts of intermonth spreading. Traders noted that volumes traditionally turn lighter at this time of the year as commercials assess crop quality and quantify. Further complicating matters, they noted, was the lagging development of the canola crop and the potential for frost damage.

The total canola volume was estimated at 3,777 contracts, down from Friday’s 6,628 contracts, including an estimated 426 contracts involved in the spread trade.

Canola was higher in the overnight market on the firm tone in international vegetable oil prices. Canola held onto its gains as the North American trading session got underway and the CBOT soy complex posted strong advances. Canola ended with small gains.

Canola was mainly supported by the big advance in the CBOT soy complex. Lingering concerns about frost, as temperatures overnight fell to near the freezing point in parts of Alberta, also gave support as did light farmer selling and friendly technical signals.

Technical traders noted that the Nov contract has been able to hold and bounce off its 20 day moving average and they termed that as very positive for the market.

Analysts noted that the small volume reflects a seasonal tendency for commercial activity to drop off at this point in August. They noted that companies are indicating that if frost does not hit for 3 weeks much of the canola crop will have pulled through the 2009 growing period with production likely at 10 mln tonnes and quality rated "reasonably good".

However keeping the canola market from following the US soy market higher was the firm Canadian dollar and the lack of fresh export demand with China notably absent from the canola market, said traders.

Crushers were the best buyers with routine exporter and Japanese pricing noted. The selling was mainly commercial.

Western barley posted moderate losses in light trade. Much of the activity was the rolling of Oct contracts into the Nov contract, traders said. The market was pressured down by weakness in the southern Alberta cash market, where prices have dropped C$10.00/metric ton in the last week.

The total barley volume was estimated at 311 contracts, up from Friday’s 98 contracts, including an estimated 304 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: