ICE Canola Rallies On Tight Supplies

Canola saw a moderate trade with intermonth spreading augmenting the volumes.

The total canola volume was estimated at 10,916 contracts, down from Wednesday’s 17,539 contracts.

Canola was narrowly mixed in the overnight trading session reflecting consolidation after recent losses with ideas that canola was oversold being balanced off by weakness in overnight international vegetable oil markets. Canola continued to be narrowly mixed as the North American trading session got underway and the Chicago Board of Trade soybean market noted a choppy mixed opening. However, old crop US soybean rallied moderately and that spilled into to support canola with canola futures outperforming the US soybean market, ending moderately higher in all contracts.

Canola was lifted by tightness in canola supplies.
In the old crop, 541,686 metric tons of canola are needed to meet export demand through the middle of July.
Farmers however are not delivering and basis levels have risen to zero.
In the new crop, strong export demand for Sept-Nov positions and the late planting of the crop have traders worried about being able to get supplies and have resulted in basis levels rising to as high as C$5.00 per ton under futures.
That accounted for canola outperforming the US soy complex, traders said.

Ideas that canola was oversold and due for a rally, continued concern about dryness for crops on the western prairies and ideas that recent declines were overdone boosted the market as well.

Weighing on the market was
weakness in CBOT soyoil futures, and the lack of fresh significant export bookings.

Routine exporter and crusher buying was augmented by good levels of speculative buying. The selling was mainly commercial with exporter selling noted.
There was some light farmer pricing in the new crop.

Western barley unchanged in very light trade. The lack of interest in the market and the very small volume left the market to drift, reacting to just small buy or sell orders, said brokers.
"When you have only 3 contracts trade, how can you say the price movement has any meaning," said one trader.

The total barley volume was estimated at 3 contracts, down from 15 contracts on Wednesday.

Prices are in Canadian dollars per metric ton: