June 1, 2009

 

ICE canola mixed; strong C$ pressures market

 

 

Canola contracts on the ICE Futures Canada platform were mixed Friday (May 29), with the July and November contracts again experiencing the bulk of the activity.

 

The strong Canadian dollar was seen as a bearish price influence while firmness in the outside markets provided some underlying support for canola, market watchers said.

 

Activity in canola was on the lighter side, with market players noting that there had been little in the way of participation from the large index funds, brokers said. There had been ideas that some rolling of positions out of the nearby July and into the November contract would have occurred Friday.

 

Gains overnight in canola came from the advances seen in e-CBOT soy and Malaysian palm oil futures. Strength in global crude oil values also influenced some early buying.

 

Advances in Chicago Board of Trade soy and soyoil futures with the start of the North American trading day also encouraged some support in a few canola contracts, brokers said.

 

Concerns about dryness in the western prairie provinces were also helping to generate some support for prices.

 

Selling in canola was influenced by the continued upward surge in the value of the Canadian dollar against other foreign currencies, brokers said.

 

The strong Canadian dollar was seen restricting domestic processor demand for canola, brokers said. Figures released by the Canadian Oilseed Processors Association early Friday showed that capacity utilization during the week ended May 27 was only 63 percent, down significantly from the previous week's 85.9 percent utilization rate. Last year at this time, domestic processors in Canada were working at 92.7 percent of capacity.

 

The absence of fresh export demand on the books also contributed to some of the selling, traders said.

 

Some of the bearish price sentiment was also being linked to ideas that canola acres in western Canada could be higher than Statistics Canada's April planting-intentions report forecast.

 

An estimated 4,614 canola contracts traded at 10:45 a.m. CDT.