ICE Canola Up On Frost Talk, Exports

Canola saw a moderate trade with intermonth spreading augmenting the activity. Some positioning was evident ahead of the Friday US Department of Agriculture supply-demand reports, traders said.

The total canola volume was estimated at 9,581 contracts, up from 9,107 contracts on Wednesday.

Canola was higher in the overnight market on the talk of export demand which offset a weak choppy tone in international vegetable oil markets. Canola held onto its gains as the North American trading session opened and the Chicago Board of Trade soybean market saw a choppy opening.
Canola ended with gains.

Canola drew support from talk of export activity with China picking up 5 cargos of canola in the past week and Mexico also a steady but light buyer, said export sources. Ideas that buying interest also appeared from Dubai and Pakistan when the Nov contract broke below C$400/metric ton also helped to support values.

Forecasts for a light frost Thursday and Friday night in northern and central Alberta and northern Saskatchewan also supplied support with the canola crop still vulnerable. US forecasters suggest that weather conditions will improve after that with 7 days of beneficial conditions before a significant frost is possible after September 18th.

Slow farmer selling, as producers focus on harvesting, contributed to the gains as did some speculative short covering
when the Nov contract briefly broke above the $400 level which made some traders nervous, traders said.

Weighing on the market was the advancing harvest with Saskatchewan reporting that 47% of the canola crop was swathed and 5% combined as of Sept 7th. The firm Canadian dollar and bearish technical signals also pressured the market. Favourable weather for most of western Canada for the next week was also a bearish factor, traders said.

Talk that the canola crop had seen a significant increase in size in the past two weeks of good growing conditions also weighed on markets, brokers said.

Exporter and crusher pricing was augmented by speculative short covering with the selling coming from commercials, elevator companies and speculators adding to their short positions, traders said.

Western barley posted small gains with trade focused in the Oct contract. Short covering lifted the Oct contract. The Nov contract was unchanged amid a lack of strong interest as the advancing harvest and large barley carryover limited interest in the market, brokers said.

The total barley volume was estimated at 23 contracts, down from Wednesday’s 174 contracts.

Prices are in Canadian dollars per metric ton: