ICE review: Canola lifted by U.S. soy gains

Don Bousquet, Resource News International

Winnipeg, March 31 — Grain and oilseed futures at ICE Futures Canada closed Tuesday’s session mixed with canola lifted by the strong upward surge in the Chicago Board of Trade soy complex, brokers said.

Canola saw a large volume of trade with intermonth spreading augmenting the activity. Commercials and commodity funds continued to dominate the spread trade.

The total canola volume was estimated at 13,211 contracts, up from 7,268 contracts on Monday, including an estimated 8,914 contracts involved in the spread trade.

Canola was higher throughout the overnight session reflecting the firm tone in outside markets. The market extended its gains following the release of the U.S. Department of Agriculture grain stocks and prospective planting report. The report showed tighter U.S. soybean supplies and lower than expected US soybean acres. Canola held onto its gains as the North American trading session got underway and the CBOT soy complex advanced sharply. Canola ended higher following a choppy session.

Canola drew the bulk of its support from the advance in the U.S. market and the firm tone in the outside markets. However, canola’s gains were smaller than the U.S. soy complex for most of the session as the sluggish export pace weighed on prices as did early strength in the Canadian dollar. The initial rally did attract in increased farmer selling and that also trimmed the market back as did the inability of the May contract to convincingly penetrate the $420 resistance level, traders said.

At the close a wave of buying, thought to be mainly commercially dominated, lifted canola to just moderate advances. Some brokers also felt that commodity fund short covering helped to lift prices. They feel that funds have now liquidated their short position in the May contract.

Routine exporter and crusher buying was supported by some early speculative buying.
The selling was mainly commercial with steady elevator company pricing noted.
The failure of penetration of resistance in the May contract prompted some speculative selling later in the session, analysts said.

Western barley ended lower following gains for most of the session in moderate mainly commercial trade.
Intermonth spreading augmented activity. The market was supported for most of the day by the big surge in corn prices and ideas that Monday’s losses were overdone , brokers said. However, at the close some commercial selling sent the market down with end user demand lacklustre, they added.

The total barley volume was estimated at 1,028 contracts, down from 1,096 contracts on Monday, including an estimated
906 contracts involved in the spread trade.

Prices are in Canadian dollars per tonne:

          Price    Change
Canola
     May     420.40    up 6.70
     Jul     424.80    up 6.30
     Nov     431.10    up 6.70
 
Western Barley
     May     142.20    dn 1.80
     Jul     149.00    dn 2.00