ICE review: Canola lifted by sluggish selling

By Don Bousquet, Resource News International

Winnipeg, March 24, 2009 —  Grain and oilseed futures at ICE Futures Canada closed Tuesday’s session mixed with canola lifted at the close by the lack of farmer selling, brokers said.

Canola saw a light trade with intermonth spreading accounting for almost half the volume.

The total canola volume was estimated at 6,337 contracts, down from Monday’s 12,874 contracts, including an estimated 2,572 contracts involved in the spread trade.

Canola futures were higher in the overnight market reflecting the gains in international vegetable oil prices. However activity was very thin and choppy. The canola market quickly turned lower as the North American trading session got underway and the Chicago Board of Trade soy complex opened mixed. The lack of demand weighed on canola for most of the session but prices turned higher in the last 15 minutes of trade as a rebound in CBOT soy complex values at the close and a lack of farmer selling allowed values to rally.

Canola was undermined for most of the session by the lack of demand as exporters indicated that fresh Chinese canola demand is at least C$20.00 per tonne under current values. A weak tone in vegetable oil markets sidelined crusher demand.
Speculative demand also faded on ideas that the soybean rally is overdone and the market will see a set back in coming sessions.

Underpinning canola and eventually turning the market to small gains was a slower pace to farmer selling which has caused some premiums to appear in the cash market, cash dealers said. However they noted that the premiums were much smaller than those of a month ago as demand in May is expected to fall as China begins the harvest of its own crop.

Routine exporter and crusher buying was augmented by early speculative buying. However the speculative buying quickly disappeared when the US soy complex turned mixed just after the US market opening. The selling is principally commercial with elevator company selling classed as steady.

Western barley posted losses in light trade. The lack of aggressive end user demand allowed prices to fall despite a firm tone in the cash market where farmer deliveries are slow, brokers said. Weakness in CBOT corn was also a bearish influence.

The total barley volume was estimated at 143 contracts, up from 40 contracts on Monday.

Prices are in Canadian dollars per metric ton:

          Price    Change
Canola
     May     422.60    up 2.60
     Jul     427.80    up 3.70
     Nov     433.40    up 3.60
 
Western Barley
     May     146.00    dn 1.50
     Jul     152.40    dn 1.50