ICE Canola Up Modestly On US Soy Gains

Canola saw a very light trade with intermonth spreading enhancing the activity.

The total canola volume was estimated at 6,578 contracts, up from Thursday’s 5,649, including an estimated 2,820 contracts involved in the spread trade.

Canola was firm in the overnight market in the wake of gains in international oilseed prices. Canola jumped to its high of the session following the release of the friendly Statistics Canada canola production estimate. However, the market worked lower for the remainder of the session finishing only modestly higher.

Canola was supported mainly by the very strong tone in CBOT soy complex futures with this morning’s StatsCan crop estimate of 9.54 mln tonnes only a minor supportive factor. The estimate was at the low end of trade guesses and is down from last year’s record 12.64 mln tonnes. However, traders say that future StatsCan report usually revise the August forecast higher and they expect higher production forecasts to come. Also giving support was slow farmer selling and lingering frost concerns as temperatures dropped below 4 degrees Celsius overnight in southern Saskatchewan.

Weighing on the market and trimming prices back from the highs was sluggish demand. Traders indicated that there has been no fresh export bookings for canola and that the crush pace has slowed.
Favourable weather forecast for the next week also weighed on the market as did bearish technical signals.

Traders were surprised as the low level of trade noting that activity has been slow since about the middle of June.
"These low volumes always make you nervous," said a trader who pointed to the market saying, "you never sell a sleeping market".

Routine exporter, crusher and Japanese buying met mainly commercial selling. However there was some speculative selling in the market on disappointment that the friendly StatsCan forecast did not cause a strong sustained rally, brokers said.

Western barley ended a bit higher in light trade. The market drew some support from the friendly StatsCan barley estimate of 8.94 mln tonnes, at the low end of trade forecasts and down from last year’s 11.78 mln tonnes. The firm tone in CBOT corn also encouraged barley prices. However end user demand was lackluster and that left the rally "anemic" said a trader.

The total barley volume was estimated at 98 contracts, up from 45 contracts on Thursday, including an estimated 90 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: