August 24, 2009

Grain and oilseed futures at ICE Futures Canada closed Friday's (August 21) session modestly higher, with canola seeing small gains mainly supported by the advances in Chicago Board of Trade soy complex futures, brokers said.

 

Canola saw a very light trade, with intermonth spreading enhancing the activity.

 

The total canola volume was estimated at 6,578 contracts, up from Thursday's 5,649 including an estimated 2,820 contracts involved in the spread trade.

 

Canola was firm in the overnight market in the wake of gains in international oilseed prices. Canola jumped to its high of the session following the release of the friendly Statistics Canada canola production estimate. However, the market worked lower for the remainder of the session finishing only modestly higher.

 

Canola was supported mainly by the very strong tone in CBOT soy complex futures with Friday morning's StatsCan crop estimate of 9.54 million tonnes only a minor supportive factor. The estimate was at the low end of trade guesses and is down from last year's record 12.64 million tonnes. However, traders say that future StatsCan report usually revise the August forecast higher and they expect higher production forecasts to come. Also giving support was slow farmer selling and lingering frost concerns as temperatures dropped below 4 degrees Celsius overnight in southern Saskatchewan.

 

Weighing on the market and trimming prices back from the highs was sluggish demand. Traders indicated that there has been no fresh export bookings for canola and that the crush pace has slowed. Favourable weather forecast for the next week also weighed on the market as did bearish technical signals.

 

Traders were surprised as the low level of trade, noting that activity has been slow since about the middle of June. "These low volumes always make you nervous," said a trader who pointed to the market saying, "you never sell a sleeping market."

 

Routine exporter, crusher and Japanese buying met mainly commercial selling. However, there was some speculative selling in the market on disappointment that the friendly StatsCan forecast did not cause a strong sustained rally, brokers said.

 

Western barley ended a bit higher in light trade. The market drew some support from the StatsCan barley estimate of 8.94 million tonnes, at the low end of trade forecasts and down from last year's 11.78 million tonnes. The firm tone in CBOT corn also encouraged barley prices. However end-user demand was lacklustre and that left the rally "anaemic," said a trader.

 

The total barley volume was estimated at 98 contracts, up from 45 contracts on Thursday, including an estimated 90 contracts involved in the spread trade.