ICE Canola Up On China Talk

Canola activity was heavy with intermonth spreading a moderate
feature of Thursday’s volume. Positioning was evident ahead of Friday morning’s Statistics Canada planting report.

The total canola volume was estimated at 25,842 contracts, up from 10,614 contracts on Wednesday, including an estimated 12,876 contracts involved in the spread trade.

Canola was higher in the overnight market reflecting the firm tone in international vegetable oil markets as Malaysian palm oil futures neared an 8 month high.
Canola continued to see strong gains as the North American trading session opened and the Chicago Board of Trade soy complex posted gains.
Canola outperformed the CBOT soybean market, ending with gains as the US soy market turned lower in the last 5 minutes of the session.

Canola drew support from news out of China that the country would buy rapeseed from its own farmers above market prices and put it into their grain reserve.
They also indicated that they would offer special loans to small and medium sized processors to help them adjust to the loss of domestic supplies. Canadian traders feel that China’s demand in the export market could approach 3 mln metric tons as a result.

Further support came from record and near record crush margins and friendly technical signals. Disciplined farmer selling on a scale up was also supportive. Exporters noted that there was some fresh interest in the export market with either China or Pakistan thought to be potential buyers.

Capping the gains were expectations for near record canola acres in Friday’s report, the very strong Canadian dollar and the continued large canola supply being held by farmers.

Exporters and crushers were strong buyers with speculative buying also noted as commodity funds bought 1,500 – 2,000 July contracts, analysts said. The selling was commercial with elevator company scale up selling noted.

Western barley advanced in light commercial trade. The firm tone in CBOT corn was a minor supportive influence with the market drawing the bulk of its support from the lack of selling and ideas that recent volatility has left barley undervalued, brokers said.

The total barley volume was estimated at 190 contracts, up from 53 contracts on Wednesday, including an estimated 2
contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: