ICE Canola Slips Off Highs As Follow-Through Buying Sags

Early gains in canola and the CBOT soy complex had been triggered by the supportive USDA supply/demand report released Thursday, which lowered the 2008/09 soybean carry-out estimate and pegged Argentine soybean production at 39 million tonnes compared with an earlier estimate of 43 million tonnes.

A lack of follow-through buying in the CBOT soybean complex after the initial rally and profit-taking ahead of the weekend caused soybean and soyoil futures to sag and canola followed suit, market watchers said.

"This is classic ‘buy the rumour, sell the fact’ action that we’re seeing today," said one Winnipeg trader.

Also, the Canadian dollar was seeing big gains Thursday versus the US dollar and that helped to take canola off its highs as well by limiting buying interest, the trader added.

However, outside markets were supportive for canola, with advances seen in equities and crude oil futures, brokers said. Six-month highs in Malaysian palm oil futures overnight also added to the early firm tone in canola.

Despite the morning price rally, farmer selling was still on the light side, partly because of spring road bans, and that was helping to keep canola values in positive territory as well.

Position evening ahead of the long holiday weekend was thought to be a minor feature of the activity Thursday. ICE Futures Canada will be closed on April 10 in observance of Good Friday.

There were moderate trade volumes in canola, with 10,081 canola contracts having changed hands as of 10:53 CDT. Of that amount, 9,032 trades were spread-related.

Western barley futures were higher but the market was very thinly traded. Only 11 contracts had changed hands as of 10:51 CDT and 8 of the trades were tied to spreading.

Prices in Canadian dollars per metric ton at 10:53 CDT: