ICE Canola Lacking Firm Direction In Quiet Trade

By Alana Vannahme, Resource News International

March 20, 2009

Winnipeg – Canola futures on the ICE Canada platform were trading at mixed levels as of 11:01 CDT on Friday amid quiet trade.

With no new information to drive prices and mixed signals from outside markets, trade sources said that canola contracts had already moved a number of times between small gains and small losses.

Elevator and commercial hedge selling as well as some profit-taking following Thursday’s rally in grain and oilseed markets were helping to pull down canola values, brokers said.

Additional downward pressure was tied to the pullback in the crude oil futures and a general lack of steady buying interest.

Traders said many participants are hesitant to put on new positions ahead of the weekend in light of the recent volatility in commodity markets.

There was minor support for canola from CBOT soyoil futures, which had managed to post gains since trading began in Chicago. There were mixed results in CBOT soybeans although the two active front months were still sitting at firmer levels.

The Canadian dollar began to retreat Friday after two days of significant strength, which was an encouraging move in terms of helping to attract export demand, brokers said.

Ideas that there could be some commodity fund buying later in the session and expectations that China will be in the market again next week for canola also helped to provide a floor for canola values, market watchers said.

Talk about rising tensions in Argentina between the government and four key farmers unions over the soybean export tax was also viewed as a bullish for North American oilseed prices.

As of 11:01 CDT, 3,390 canola contracts had been traded and of that amount 1,616 were spread-related.

No western barley contracts had changed hands of 11:01 CDT, leaving values unchanged from the previous day’s levels.