ICE Canola Up On US Soy Rally

Canola saw a moderate trade with intermonth spreading augmenting the volumes.

The total canola volume was estimated at 16,169 contracts, up from Monday’s 8,129 contracts.

Canola was narrowly mixed to lower through the overnight session as the advancing harvest was balanced off by the firm tone in international vegetable oil prices. Canola turned higher as the North American trading session got underway and the US soy complex rallied. Canola moved to highs with the US market, but by the close had backed down to just moderate gains.

Canola was supported by the big surge in US soy complex futures and the increased chance for frost to hit the canola crop in western Canada next week.
With the canola crop 2-3 weeks late, frost next week would catch a significant amount of the crop vulnerable, said brokers.

Contributing to the rally was technically based speculative short covering triggered by the move above C$400 in the Nov contract, analysts said.
"Everybody was expecting a test of support at C$388 (in the Nov contract) today and when the market penetrated resistance at $400 that triggered panic buying that quickly took the Nov contract to its high (of $407.10 per metric ton)", said a trader.

Talk of export pricing contributed to the gains although export sources said there was no unusual export activity in the market.

Capping the gains was the advancing harvest and ideal weather forecast through the weekend. The firm Canadian dollar and increased farmer pricing once the canola market rose above $400 in the Nov contract also helped to trim the gains back, traders said.

Exporter and crusher pricing was augmented by some commission house short covering. The selling was mainly commercial with elevator company selling evident in the trade.
Commodity funds were thought to be sellers early in the day.

Western barley rallied in light trade. The Oct contract was lifted by speculative short covering as traders exit the soon to be de-listed contract. The Nov contract was higher on the big surge in US corn prices and the lack of farmer selling, brokers said.

The total barley volume was estimated at 227 contracts, up from only 10 contracts on Monday.

Prices are in Canadian dollars per metric ton: