ICE Canola Up On US Soy Rally

Canola saw a moderately active trade with intermonth spreading enhancing the volume.

The total canola volume was estimated at 10,411 contracts, up from Thursday’s 8,919 contracts, including an estimated 3,280 contracts involved in the spread trade.

Canola was higher in the overnight market as it reacted to the big gains in CBOT soy complex futures on Monday when ICE Canada futures were closed for a holiday. Canola held onto its gains, despite a weaker opening in the CBOT soy complex, as the North American trading session got underway, brokers said. Canola ended higher as the US soy complex posted gains later in the session.

Canola was supported mainly by the firmness in the US soy complex with some strength tied to the lack of farmer selling, analysts said. Also giving support were technical factors as the March contract bounced off of support levels.
"Last week’s performance of the Mar contract looks like it was falling out of bed, but this week’s bounce looks pretty solid. We’re still holding the trading range" said a technical trader.

Some buying could also be traced to positioning ahead commodity funds rebalancing their position in the canola market which is expected in January.
It is felt that could significantly lift the canola market, traders said.

Big gains in the Canadian dollar initially weighed on the market but that strength faded as the session wore on and the small gains in the Canadian dollar actually became supportive.

Also weighing on the market was weakness in CBOT soyoil futures, the large canola supply in western Canada and continued uncertainties surrounding canola exports to China.

Crushers were noted buyers with routine exporter pricing noted.
Speculative buying was also noted in Tuesday’s trade. The selling was mostly commercial.
Year end and month end positioning was also evident in the trade.

Western barley ended mixed to mainly higher in moderate trade. Much of the activity was the rolling of Jan contracts into the March contract ahead of month end and that accounted for the choppy tone, brokers said. Commercials dominated the activity.

The total barley volume was estimated at 476 contracts, up from no volume on Thursday, including an estimated 472 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: