ICE Canola Firms On Slow Selling

Canola saw a light trade with very little intermonth spreading evident.

The total canola volume was estimated at 6,058 contracts, up from 4,413 contracts on Wednesday, including an estimated 770 contracts involved in the spread.

Canola values were a bit lower in the overnight market, reflecting weakness in international vegetable oil values. Canola continued to trade at those losses as the North American trading session opened and the Chicago Board of Trade soy complex dropped moderately. Canola turned higher in the last 45 minutes of the session, ending modestly higher.

Canola was supported by the slowing pace to selling with farmer selling on the light side.
Speculative liquidation selling, that has been evident in the market for over a week, also slowed.
Export demand, with traders feeling that Mexico was in the market, contributed to the rally as did steady Japanese buying. However some trade sources felt the export buying was related to fresh Chinese demand in the new crop.
The weak Canadian dollar and continued concerns about the canola crop, as temperatures in Saskatchewan were particularly cold overnight, gave some support.

Traders fear that the cold conditions have slowed crop maturation to the point that it will be vulnerable to frost.

Weighing on the market was the losses in the US soy complex, improving weather in western Canada and bearish technical signals.
Environment Canada is forecasting a return to normal to above normal temperatures across the prairies with those conditions forecast through the middle of August, analysts
said.

Exporter and crusher buying met commercial and speculative selling. Commodity fund liquidation selling was evident in the trade with their selling thought to be about 500 – 700 Nov contracts.

Western barley ended lower in light trade. Barley was undermined by ideas that it was overvalued on talk that as much as 1.5 mln tonnes of corn and DDGS (dried distiller grains with solubles) will be imported from the US into western Canada in 2009-10, brokers said.

The total barley volume was estimated at 154 contracts, up from Wednesday’s 96 contracts.

Prices are in Canadian dollars per metric ton: