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ICE Canola Futures Up On Frost Ideas

| 2 min read

By Dwayne Klassen, Resource News International

September 21, 2009

Winnipeg – Canola contracts on the ICE Futures Canada platform were trading at higher price levels as of 9:40 EDT. Reports of frost in central Alberta helped to spark some of the buying seen in canola futures, although the losses overnight in the e-CBOT soybean complex and better than expected yield potential in western Canada was limiting the upside, market watchers said.

Temperatures between Calgary and Edmonton, Alberta dropped below freezing for a few hours overnight, brokers said. Some areas north of Edmonton, which is also a prime canola growing region also reportedly suffered some freeze damage. The frost warning remains in effect for the area tonight. They noted that a fair amount of canola was still standing in the area in which the frost warning applies.

Rain related harvest delays in the provinces of Saskatchewan and Manitoba were also providing canola futures with some support, traders said.

Talk of fresh export demand was also helping to prop up canola futures with steady domestic crusher demand also a supportive price influence.

Weakness in the Canadian dollar early on Monday was helping to buoy canola values.

The upside in canola will be limited by bearish technical signals, the lower calls for CBOT soybean and soyoil futures and by talk of better than expected yields in the harvested canola to date, brokers said.

Statistics Canada will update its crop production estimates on Friday, October 2. Most market participants are anticipating a much larger western Canadian canola crop.

The return of warmer weather to much of the Canadian grain belt later in the week was also being viewed as an undermining price influence, brokers said. Losses in European rapeseed futures overnight, declines in global crude oil and early declines in the North American equity sector were also bearish price factors hanging over the canola market, traders said.

As of 9:40 am EDT, there were 1,322 canola contracts traded.

As of 9:40 EDT, no western barley contracts had changed hands. Brokers noted that there was a bearish feel to barley prices early Monday especially in view of barley moving off the combine into the cash pipeline and in the absence of feedlot buying interest.