May 30, 2011

ICE canola gains along with European market

ICE Futures Canada canola contracts closed higher on Friday (May 27), supported by the continued strength in the European rapeseed market.

Fund buying added to the firmer tone in canola, as prices tested nearby resistance levels, said traders.

Rains hitting the already wet areas of Manitoba and Saskatchewan will lead to further planting delays in the region, heightening concerns over new crop production, said traders noting that the weather uncertainty had exporters and domestic crushers looking to book some coverage.

Spill over from the continued strength in the European rapeseed market, which has rallied the past month over drought concerns, was another supportive influence in canola, according to market participants. The advances in canola came despite a relatively softer tone in CBOT soy, and an analyst said some of the independent strength in canola was tied to the concerns with the European rapeseed crop.

Speculative fund buying was also a feature, as the most active November contract moved past the psychological CAD600 per tonne level.

Along with the losses in soy, the stronger tone in the Canadian dollar was also a limiting factor in the canola market, as the stronger currency cuts into crush margins.

About 28,107 contracts were traded on Friday, which compares with Thursday (May 26) when an estimated 23,949 contracts changed hands.