Latest forex news, ICE Canada Grain Review: Canola Firm As Exports Offset Weak Soy

Thu, Sep 3 2009, 19:07 GMT

CE Canada Grain Review: Canola Firm As Exports Offset Weak Soy

WINNIPEG (Dow Jones)--Grain and oilseed futures at ICE Futures Canada closed Thursday's session mixed, with canola narrowly mixed at firm levels, as export demand offset the impact of favourable weather and the big decline in the Chicago Board of Trade soy complex, brokers said.

Canola saw a very active trade with good levels of intermonth spreading evident.

The total canola volume was estimated at 27,121 contracts, up from 12,295 contracts on Wednesday. "This was the best one day volume we've seen since April", said a trader.

Canola fell sharply in the overnight session breaking below C$400 in the Nov contract, but quickly rebounded when selling dried up and buying came forward. The market drew some support from the gains in e-cbot soybean futures. Canola held onto small gains as the North American trading session opened and the CBOT soy complex posted small gains. However, canola then followed the U.S. market down, but didn't see the big losses that occurred in U.S. soy, traders said. Canola ended narrowly mixed with most contracts higher.

Canola was pressured down by the big losses in the CBOT soy complex futures, increased farmer selling as producers make space for the new crop, and the favorable growing conditions forecast through next week. Weather forecasters say that the first chance of frost is the middle of next week in central and northern Alberta.

Bearish technical signals also weighed on the market as did ideas that the better weather is improving yields for canola, traders said

However, the market was supported by heavy speculative short covering triggered when the canola market dropped to $398.80 and then rebounded. Export demand also appeared as canola is favorably priced against European rapeseed after the Canadian market drop of $25 per metric ton this week, grain trade sources said. Traders felt that either Pakistan or China had picked up at least 1 cargo of canola. Traders were describing the support at the $400 level in the Nov. contract as "formidable".

Exporters were the best buyers with speculative short covering and crusher buying also evident. The selling was commercial with steady elevator company hedging noted. Commodity funds were thought to have added to their short position in the Nov contract today.

Western barley rallied in light trade. The Nov. contract was supported by the discount of the futures contract to the southern Alberta cash market. However brokers feel the two markets are now in line. Commercials were the main traders.

The total barley volume was estimated at 197 contracts, up from Wednesday's 184 contracts.

Prices are in Canadian dollars per metric ton:

Price Change
Canola Nov 408.30 dn 0.30
Jan 413.30 up 0.10
Mar 417.00 up 1.80
Western Barley Oct 105.00 up 3.00
Nov 144.00 up 3.00

Spread trade prices and volumes are not available today.

-By Don Bousquet; contributing to Dow Jones Newswires; 204-947-1700 resnews@shawbiz.ca

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(END) Dow Jones Newswires

September 03, 2009 15:07 ET (19:07 GMT)