ICE Canola Up Modestly In Thin Trade

Canola saw a very small activity with an estimated 112
contracts traded as of 08:49 CDT. Traders felt the small volumes reflected uncertainty ahead of the North American trading session. The ability of the market to follow through on Thursday’s big gains in the oilseed markets as well as week end and month end positioning has sidelined many participants. Also keeping activity subdued is the fact that the ICE Canada market will be closed on Monday for a holiday while the US market is open.

Canola was little changed to narrowly mixed for most of the overnight session seeking direction and attempting to digest the large rally on Thursday, said traders. The firmer tone in the overnight international vegetable oil and oilseed markets provided only minor support, traders said.

Canola is expected to hold small gains as the North American trading session gets underway and the Chicago Board of Trade soybean market is expected to post gains, said traders.
Some analysts feel that the canola market may have put in a pre-harvest low this week and that the downside is limited.

"You have the exporters lurking out there picking up supplies whenever their offered and that is going to supply a pretty firm floor to the market," a broker said. He also noted that "the market is putting in a weather premium as we move into August."

However, many traders are looking for today’s trade to be a choppy affair as the market needs to consolidate, after the largest one day rally since Oct 2008. They also note that end-of-week and month end evening up will contribute to the choppy tone.

The continued concern about cool temperatures across western Canada with temperatures forecast to be below normal for another week also is a supportive influence. Talk that dryness is becoming a problem once again in parts of Alberta was also supportive.

The main negative factor this morning is the firm tone in the Canadian dollar, said traders.

Traders feel it will be mainly a commercial trade today ahead of the long weekend as commodity fund short covering is not expected until the market rallies above the C$420/metric ton level in the Nov contract.

Western barley is expected to see a choppy session with the Oct contract dominated by liquidation trade. That is expected to boost the Oct contract.

The Nov contract is expected to be under pressure from the cash market. Cash activity is very light in southern Alberta with cash trades occurring in the $170-$172 per ton area, said traders.

As of 08:47 CDT, the estimated volume in barley was 28 contracts.

Prices at 08: 48 CDT in Canadian dollars per metric ton: