ICE Canola Firms On Undervalued Ideas

Canola saw a light trade as an estimated 800 contracts had traded by 08:44 CDT.

Canola saw a choppy overnight session as profit taking and technically based selling was balanced off by the firm tone in international vegetable oil markets. Canola turned higher as the North American trading session got underway and the Chicago Board of Trade soy complex was expected to rally, traders said.

Canola is expected to see gains on Friday as long as outside markets, including crude oil, equities and metals,
remain firm.
Canola is also being supported by the soft Canadian dollar.

Commercial demand has picked up as canola values have dropped to attractive levels internationally, said brokers.
"I think you’ve got to do some buying at these prices, canola is cheap," said a broker.
Crush margins have seen a significant improvement during the week and that has also encouraged crusher pricing.

Contributing further support is the weather uncertainty which has slowed farmer selling.
Traders indicated that farmers are generally bullish on canola expecting to see a weather related rally in the next month.
"The only (farmer) selling your seeing is cash flow related," said a cash dealer.
Weather forecasts call for improved weather over the next week.
While that is bearish for the market, analysts still note that "weather jitters" remain across the market on fears of a frost.

"We are going to see a frost in the next month..the question is how severe will it be," said a broker.

Chinese demand continues to be evident
with some routine fall delivery bookings noted, exporters said. Analysts point to the strong Aug export pace as a sign that China is still aggressive in the market. Canola shipments through end of August are reported at 348,000 metric tons by the port authorities.

Weighing on the market are some bearish technical signals and the fact that the Canadian dollar, while down this morning, is still near 10 month highs against the US currency, said traders.

Commercial and speculative buying is meeting mainly commercial selling with
some light elevator company selling and some European selling also noted, said brokers.

Western barley was untraded and unchanged with futures and cash prices in line said traders.
As a result, brokers feel that barley prices will be little changed to a bit higher today unless US corn sees a significant decline.

Prices at 08:43 CDT in Canadian dollars per metric ton: