ICE Canola Strengthens on Weather Uncertainties

Weakness in the Canadian dollar and gains overnight in Malaysian palm oil futures also helped to stimulate some early buying interest in the commodity, brokers said.

"The weather problems in western Canada were brought to light by the USDA this morning, which in turn has helped spark some new buying in canola," traders said.

The US agency indicated that not only have wheat crops in western Canada been suffering due to the adverse weather, but so has canola.

Reports out of western Canada indicate that only 20% to 25% of the canola crop has seen normal emergence so far this growing season and that virtually the entire canola crop has been touched by frost this spring.

Adding to the upward price momentum in canola has been the reluctance of producers to deliver canola into the cash pipeline given the uncertainty facing production prospects, brokers said.

Routine exporter pricing of sales to Mexico and Japan were supportive and contributed to the price gains in canola.

Domestic crush margins remain generally favourable and were seen as supportive despite the recent pull-back in demand from this sector, traders said.

Contributing to the strength in canola were the advances being posted in US soymeal Wednesday, brokers said.

"Instead of canola being driven by soyoil, today it seems to be responding to the meal market in the US," a trader said.

The upside in canola was limited by the absence of fresh export demand
and light profit-taking by participants at the high end of the market, brokers said.

There were an estimated 12,155 canola contracts traded at 11:07 CDT.

There were no western barley futures traded as of 11:07 CDT.

Prices in Canadian dollars per metric ton at 11:07 am CDT: