January 25, 2010

ICE canola climbs on weak dollar, steady export demand

Canola contracts on the ICE Futures Canada platform were trading at higher prices at midday Friday (Jan 22) with the continued weakness of the Canadian dollar and steady exporter demand behind the momentum, market watchers said.

Some of the export demand was said to be covering both old as well as fresh sales, brokers said.

Overbought price sentiment and the buying back of previously sold positions by a variety of market players also contributed to the strength, traders said.

Adding to the support in canola was the lack of farmer deliveries into the cash market. Traders noted that producers have slammed the doors shut on their canola bins and were waiting for better cash bids before unlocking those doors.

There were reports that a few of Viterra's elevators in Alberta have tightened basis levels in hopes of enticing producers to deliver some canola, traders said.

The upside in canola, however, was limited by the losses seen overnight in Malaysian palm oil. Weaknesses in CBOT soy and soyoil futures were also restricting some of the price gains, brokers said.

The large global oilseed supply situation was also seen as an undermining price influence.

There were an estimated 9,358 canola contracts traded at 11:02 a.m. CST.