ICE Canola Up Again On Weather Uncertainty

With planting deadlines fast approaching in western Canada, traders are trying to get a handle on just how many canola acres will be left unseeded this year due to the wet weather. That uncertainty is causing the market to ration some demand, taking prices higher. Farmers are also reluctant sellers given the planting problems and the fact that much of the canola in the ground is also dealing with excessive moisture.

The rally over the past week was seen as bullish from a technical standpoint, and traders said speculative buying was adding to the upside.

News that China would be extending its transitional measures to allow Canadian canola to continue to enter the country in 2010/11 (Aug/Jul) provided some further support for canola, as China is a major export destination for the crop.

Ideas that the rally in canola may be looking a little overdone, leaving the market open to a profit-taking correction, limited the advances in canola, according to traders.

Ongoing firmness in the Canadian dollar and the generally favourable US growing conditions also tempered the upside. Malaysian palm oil futures were weaker in overnight activity, while the Chicago soy complex was narrowly mixed.

About 2,400 canola contracts had traded as of 8:29 CDT.

Western barley futures were untraded and unchanged early in the day.

Prices in Canadian dollars per metric ton at 8:29 CDT: