ICE Canola Up On Vegoil Gains, Outside Markets

Canola saw good levels of activity overnight as an estimated 2,994 contracts had traded by 08:48 CDT. Week-end and month-end activity was expected to stimulate volumes and lead to some choppiness during the session, traders said.

Canola was higher in the overnight market reflecting gains in e-cbot soy complex futures and the stronger tone in outside markets, including crude oil. Canola is expected to hold its gains as the North American trading session gets underway with the US soy complex forecast to rally.

Contributing to the gains will be the continued slow pace to farmer selling as exporters line up supplies for an strong export program scheduled for September. Also underpinning the market is the lingering frost concerns although there are " no credible forecasts for frost in the next week", said traders.

Friendly technical signals are stimulating speculative demand and that will be supportive. Technicians indicated that they are looking for a confirmation of the bounce off of 20 and 50 day moving averages "and if that comes, then look for the Nov contract to hit C$450.", they said.

The firm tone in the outside markets this morning, including crude oil, precious metals and stock markets will also give support, say brokers.

Limiting the upside is the firm tone in the Canadian dollar and the favourable weather forecast into Thursday of next week by Environment Canada. "With the (canola) crop late and the traditional frost dates fast approaching, every day without frost is a blessing," said a trader.

Commercial and speculative buying met commercial selling in the overnight trade.

Western barley is lower in light trade. The Oct contract continues to be pressured by liquidation selling.
The Nov contract is being pressured by large supplies of competing feed products in western Canada. However, traders noted that the end user buying that appeared on Thursday seems to be in the market again this morning.
"They (feed lots) are not aggressively bidding but I think prices have dropped low enough to be attractive for them," said one trader.

The total barley volume was
estimated at 90 contracts at 08:47 CDT.

Prices at 08:47 CDT in Canadian dollars per metric ton: