ICE Canola Undermined By Surging Loonie

Canola had an active trade with intermonth spreading accounting for much of the volume. Funds and commercials dominated the spread trade.
Many participants took to the sidelines ahead of the Wednesday morning US Department of Agriculture supply- demand reports.

The total canola volume was estimated at 14,462 contracts, down from 14,734 contracts on Tuesday, including an estimated 8,982 contracts involved in the spread trade.

Canola was lower in the overnight market in reaction to the firm tone in the Canadian dollar which offset any support from the gains in overnight international vegetable oil markets. Canola turned narrowly mixed as the North American trading session got underway and the US soy complex rallied. Canola ended narrowly mixed with selling at the close weighing on the market.

Canola drew much of its early support from the strength in CBOT soy complex values.
However production uncertainties, due to weather problems, also gave support.. One analyst indicated that only 20% to 25% of the canola crop has normal emergence so far this growing season and that virtually the entire canola crop has been touched by frost in the past few weeks. The canola crop uncertainties have slowed farmer selling as producers assess the situation, helping to keep the July contract higher.

Capping the advance and eventually sending most contracts to marginal declines was the very strong Canadian dollar which is making canola overvalued in the international market, said an exporter.
Also weighing on the market was the sluggish pace to crusher demand.

Activity was felt to be routine with light exporter and crusher pricing meeting light elevator company selling. Speculative activity, outside of the spreads, was subdued.

Western barley values were little changed in very small activity. Participants doing some positioning accounted for the bulk of the volume.

End user and producer demand remains subdued ahead of the introducing of the revised barley contract as the current contracts will not be interchangeable with the new contracts.

The total barley volume was estimated at 87 contracts, up from 57 contracts on Monday, including an estimated 60 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: