ICE Canola Firms On Weather

Canola saw a light trade with only small amounts of intermonth spreading. Activity was subdued ahead of the Canadian long weekend that will see the ICE Canada market closed on Monday while the Chicago Board of Trade will be open. End-of-week and month-end positioning was noted. In addition, July 31st is the end of the crop year and there was some activity linked to year end positions, traders said.

The total canola volume was estimated at 5,985 contracts, down from Thursday’s 6,819 contracts, including an estimated 370 contracts involved in the spread trade.

Canola was narrowly mixed in the overnight session, digesting
Thursday’s largest one day move of 2009, with the firm tone in international vegetable oil and oilseed markets giving mild support. Canola continued to be narrowly mixed as the North American trading session got underway and the CBOT soy complex opened higher. Canola saw a choppy session bouncing from small gains to small losses throughout the session, ending Friday’s trade higher with the market firming in the 45 minutes of the session. .

Canola was supported by continued talk of Chinese demand and by the need to build a weather premium into the market, brokers
said.

The cool conditions forecast for Western Canada at the beginning of August have caused concern amongst traders with closely watched
weather forecasters predicting a frost on the prairies by the middle of the month.
With the canola crop 2-4 weeks behind in development, analysts say that the crop will be vulnerable to a frost until late in September.
Traditionally, western Canada experiences it s first frost in late August. The Canola Council of Canada is also warning that dryness concerns have returned to the crop in Alberta.

Steady but unaggresive commercial demand also helped to underpin the market as did the slow pace to farmer selling. The late rally in CBOT soy complex futures was a minor supportive feature, analysts
said.

Weighing on the market was the firm Canadian dollar, traders said.

Exporter and crusher pricing was augmented by Japanese buying.
The selling was mainly commercial with exporter liquidation selling noted.
Commodity funds were small traders on both sides of the market.

Western barley ended lower in a light choppy trade. A weak tone in the southern Alberta cash markets and ideas that Thursday’s gains were overdone pressured the market down, brokers said.

The total barley volume was estimated at 152 contracts, down from 188 contracts on Thursday, including an estimated 40 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: