ICE Canola Firms On US Soy Gains, Technical Support

Canola saw moderate activity with the estimated volume at 11:20 CDT 6,101 contracts.

Canola was pressured down early in the North American trading day on a technically driven test of support at the C$400 in the Nov contract and on early strength in the Canadian dollar. However as the session progressed the Canadian dollar dropped sharply and the $400 level held which stimulated commercial and speculative buying which lifted the canola market, traders said.

Contributing to the firm canola tone was overnight temperatures in western Canada that dipped as low as 5 degrees Celsius, forcing many traders to acknowledge the potential for frost damage to the crop.
"It is inevitable we will see a frost by this time in August", said one trader.
"This reminds of 2004 when frost sent the (canola) market up $80 (per ton)," he added.

The firm tone in the CBOT soy complex also gave support with some analysts noting that as long as CBOT Nov soybeans remain above US$9.00/bu then Nov canola will stay above C$400/ton.

Farmer selling has slowed as we come up to the end of the crop year on July 31st.
"There was some increased year end selling in early July but that has all faded, said a cash dealer.

Maintaining selling pressure on the market was speculative selling, testing the $400 in Nov, with traders indicating that there is significant fresh fund short selling below that level.

Favorable growing conditions weighed on values as did weakness in crude oil, said analysts.

Exporter and crusher demand was stimulated by the Nov contract bounce off the day’s lows with commission house short covering also noted, traders said. The selling was a combination of commercial and speculative.

Western barley posted losses in a light commercial trade. The market was pressured down by the import of cheap feed alternatives from the US and ideas that Canadian barley acres are higher than the last StatsCan forecast, brokers said.

The total estimated barley volume at 11:17 CDT was 55 contracts.

Prices at 11:17 CDT in Canadian dollars per metric ton: