ICE Canola Firms On Soy Gains, Strong Cash

Canola saw a moderate trade with an estimated 1,774 contracts traded as of 08:45 CDT.

Canola was mixed in the overnight trade with the heavily traded Nov contract higher, supported by the firm tone in the overnight US soy complex market and a firm tone in cash markets, brokers said. The very low volumes in the deferred contracts represent sluggish interest in those contracts and account for the losses there.
"With only 1 contract traded in the Mar contract, can you trust the lower price when the Nov contract is higher and has traded over 1,700 contracts," said a trader.

Canola is expected to hold its gains as the North American trading session gets underway and the Chicago Board of Trade soybean futures rally, traders said.

Contributing to the strength in the canola markets will be a firm tone in the cash markets as companies attempt to line up supplies to meet their aggressive September canola export program, said brokers.

"You have to get canola bids up to the C$10.00/bu level to get canola out of producers’ hands and right now the price in most areas is below the $10.00 level," said a cash dealer. Farmer selling of canola remains slow and that will also help to support the market.

Also supporting the canola market is the friendly technical picture with technicians feeling that the Nov contract will move to the $450 in the near term.

Frost concerns continue as the crop approaches traditional frost dates in western Canada.
Currently, some private US forecasters are calling for possible frost next week.
Overnight frost did occur once again in the western portions of the Peace River region of Alberta.

Capping the gains was the firm Canadian dollar, favourable weather for canola crop forecast through the middle of next week with Environment Canada calling for warm temperatures and generally sunny skies, traders said. The lack of fresh exports and ideas that canola is overvalued also weighed on the market.

Outside markets were mixed and provided no convincing lead for canola this morning, said traders.

Western barley is lower in light trade.
The Oct contract continues to be pressured by liquidation selling while the Nov contract is being undermined by a soft tone in the cash market, traders said. However, traders did note that some end user demand does seem to be coming forward in the Nov contract and that should limit the losses in the Nov and may even turn it higher.

The barley volumes were estimated at 32 contracts as of 08:44 CDT.

Prices at 08:44 CDT in Canadian dollars per metric ton: