December 9, 2009

ICE canola slightly firmer; news on canola meal supportive

Canola contracts traded on the ICE Canada platform were steady to higher at noon EST Tuesday, with the weak Canadian dollar and positive export news regarding canola meal providing support.

Reports were circulating in the market that the US Food and Drug Administration had lifted its restrictions on canola meal imports from a Cargill plant in Saskatchewan. While there was no word on the other four Canadian canola-crushing plants still barred from shipping canola meal to the US, due to salmonella concerns, a broker said the lifting of the restrictions on the one plant was generating some buying interest in the market.

Weakness in the Canadian dollar provided some further support for canola, as the weaker currency makes the commodity more attractive to export customers.

Losses in the CBOT soy complex were putting some pressure on canola values, according to the broker. However, he added, any farmer selling was only coming in on a scale-up basis, which limited the downside.

At noon EST, about 9,400 canola contracts had changed hands, with the January/March spread accounting for the bulk of the contracts traded. The January/March spread was widening, as participants roll their positions out of the nearby January contract into the March futures.