ICE Canola Lifted By Slow Selling, Weak C$

Canola saw a light trade with moderate intermonth spreading. Traders termed the low volumes as normal for the last two weeks in August.

The total canola volume was estimated at 6,882 contracts, down from Tuesday’s 7,757 contracts, including an estimated 1,480 contracts involved in the spread trade.

Canola was higher in the overnight market on the weak Canadian dollar and a firm tone in e-cbot soybeans overnight. Canola held onto its gains as the North American trading session got underway and the Chicago Board of Trade soybean complex rallied. The US soy market then turned weaker, but canola held onto its gains ending the day moderately higher.

Canola drew much of its support from the lack of willing sellers with producers generally sidelined by their bullish attitudes toward canola. An aggressive export schedule for canola in September also gave support to the market as did friendly technical signals.

Technically, traders are looking for the Nov contract to rally to the C$450/metic ton level.
The weak Canadian dollar was also supportive as was a statement from the Bank of Canada that it would move to keep the Canadian dollar weak against the US currency.

Lingering frost concerns also supported the market as temperatures in the Peace River district of Alberta fell to the freezing point, although traders indicate there was no significant crop damage. However traditionally, frost appears in northern Saskatchewan growing areas near the end of August and that supported the market with the crop running 2 to 4 weeks late in development.

Weighing on the market was a weak tone in crude oil and in the US soy complex. Favourable weather forecast through next week also pressured the market down as did the lack of fresh export demand, traders said.

Exporter and crusher buying was augmented by commodity fund buying while the selling came from commercials and commission houses. European hedge selling was also evident, brokers said.

Western barley ended lower in light trade. The market was pressured down by weakness in the Southern Alberta cash market. Liquidation selling, linked to a US commodity fund decision to get out of the barley market because of poor liquidity, also weighed on the Oct contract.

The total barley volume was estimated at 293 contracts, up from 132 contracts on Tuesday, including an estimated 126 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: