ICE Canola Up On Technical Support, US Soy

Canola saw a moderate trade with light intermonth spreading evident.

The total canola estimated volume was 9,496 contracts, down from Monday’s 10,857 contracts, including an estimated 1,208 contracts involved in the spread trade.

Canola had been lower in the overnight session on the firm Canadian dollar and technically based selling as traders were testing the support at the C$400 level in the Nov contract. Canola continued to see losses as the North American trading session got underway, despite the gains in CBOT soy complex futures. As the session wore on, support at $400 level held and the Canadian dollar turned lower. Canola then move higher ending with small gains.

Canola drew support from the big advance in the CBOT soybean market and the triggering of buy orders when the canola market held support at the $400 level, traders said. The cool overnight temperatures, with values as low as 5 degrees Celsius in Saskatchewan, also prompted support, traders said.

"Temperatures are running over 10 degrees (Celsius) below normal in many places…you have to be worried about frost", said a trader. "The forecasts also don’t show any significant improvement and these are traditionally the warmest days of summer," he added. Another traders noted that this year is shaping up to be "like 2004 when an August frost prompted an $80 rally in canola".

Exporter and crusher pricing was triggered by the markets ability to hold the $400 level with speculative short covering also evident. The selling came from commercial offerings and steady speculative selling. Farmer selling was light. The speculative selling was prompted by ideas that if the market can drop below support at $400 in the Nov contract it will trigger large short selling by funds that are below that level.

Western barley ended lower in a light commercial trade. Barley was undermined by sluggish demand, competition rom cheap feed alternatives, ideas that barley acres are higher than the last StatsCan forecast and talk that frost would lower the quality of many grains to feed quality, brokers said.

The total barley volume was estimated at 85 contracts, up from no activity on Monday.

Prices are in Canadian dollars per metric ton: