ICE Canola Lifted By Crusher Demand

Canola saw an active trade with much of the volume comprised of the Jan/Mar spread as grain companies bought the spread and crushers were sellers of the spread.

The total canola volume was estimated at 17,757 contracts, up from 16,485 contracts on Monday, including an estimated 14,934 contracts involved in the spread activity.

Canola was lower for the bulk of the overnight session, prompted by the large canola supplies and lackluster demand. Canola continued to see losses as the North American trading session got underway and the Chicago Board of Trade soybean market saw a choppy opening. Canola rallied late in the session, finishing with small gains.

Canola was supported by the very weak Canadian dollar and very strong crusher demand. Trade sources noted that the crushers in the Yorkton, Saskatchewan area were drawing canola from Alberta areas that traditional just serve the export market.

News that Cargill’s crusher in Saskatchewan was now allowed to deliver canola meal into the US gave the market a boost. Previously the US Food and Drug Administration had halted canola meal shipments from that plant due to salmonella contamination. While the Cargill plant was allowed to move canola meal into the US, the Bunge and Viterra plants were still not allowed to according to the FDA.

Friendly technical signals prompted speculative buying with technicians now looking for the Jan contract to hit the C$418-$419 per metric ton level.

Farmer selling was also slow as bitterly cold temperatures across western Canada this week have halted country movement, said cash dealers.

Capping the gains was the weak tone in CBOT soy complex futures, uncertainty about exports due China’s continued embargo against Canadian canola with Blackleg and the very large Canadian canola supply.

Crushers were strong buyers with routine exporter pricing noted.
Commodity fund buying was estimated at 800 Jan contracts. The selling was mainly commercial with grain company selling noted.

Western barley was steady to a bit higher in light commercial trade. The lack of country movement gave support, but was partially offset the fact that the cash bids are below futures prices, brokers said.

Also weighing on the Jan contract was the fact that recent activity in the contract was comprised mainly of liquidation. "It looks like people don’t want to trade this barley contract," said a trader.

The total barley volume was estimated at 46 contracts, down from Monday’s 100 contracts, including an estimated 14 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: