ICE Canola Firms On Late Short Covering

Canola saw a moderate trade with only light intermonth spreading.

The total canola volume was estimated at 7,832 contracts, up from Thursday’s 5,885 contracts, including an estimated 530 contracts involved in the overnight trade.

Canola was mainly a bit lower in the overnight trade in anticipation of a bearish US Department of Agriculture supply-demand report. Canola maintained its declines as the North American trading session got underway and the Chicago Board of Trade soybean markets dropped moderately. Canola ended mainly a bit higher as selling faded.

Canola turned higher in the most actively traded contracts in the last hour of the session as selling slowed.
Friendly technical signals, as canola sits at a significant support level, and speculative buying boosted the market. The buying reflected speculative short covering by traders who had been anticipating a "bearish shock" in the USDA report and were forced to cover their short positions as selling faded. Farmer selling was also light, although cash dealers did note that there was an increase in country movement. The firming tone in CBOT soyoil also supported values.

Canola was lower for most of the day on the weakness in CBOT soybean futures, sluggish demand and the rains this week that improved the crops, analysts said.

Crusher and exporter buying was augmented by speculative short covering with market pressured down by commercial and speculative selling. Traders noted that there was some continued speculative liquidation selling in the Nov contract that has pressured the market this week.

Western barley ended mixed in light trade. The Oct futures continues to feature liquidation trade as the contract specifications cease when this contract ends. That accounted for choppiness. The Nov contract tumbled in the generally bearish tone in feed grain markets, brokers said.

The total barley volume was estimated at 135 contracts, up from 122 contracts on Thursday.

Prices are in Canadian dollars per metric ton: