By Dwayne Klassen, Commodity News Service Canada
January 24, 2013
WINNIPEG – Canola futures on the ICE Canada trading platform finished higher on Thursday with the continued downswing in the value of the Canadian dollar and the subsequent pick up in demand, generating the upward price action, market watchers said.
The weak Canadian currency makes it more attractive for importers to buy Canadian canola as well as make it cheaper for domestic processors to crush canola. The Canadian dollar was trading below parity with the US currency during Thursday’s session.
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Domestic processors were good buyers of canola with exporters also believed to be covering some old business as well as rumours of fresh sales, traders said.
The weak Canadian unit also sparked some fresh speculative interest in holding canola positions, brokers said. Some of the support in canola also reflected ideas that supplies of the commodity are growing tight and that values will need to rise further in order to ration the stocks that remain in western Canada.
Chart-based buying by fund accounts also helped to keep a firm floor under canola futures, brokers said.
The upside in canola was restricted by the declines posted by CBOT soybean futures. The taking of profits by a variety of market participants also held the advances seen in canola in check.
Elevator company hedge selling was evident and tempered the upside price potential in canola as well. Much of thoat selling was tied to steady farmer selling, as cash bids for canola continue to remain quite high and are attracting farmer deliveries, brokers said.
Spreading was a feature of the activity in canola and contributed to the volume total.
There were an estimated 22,571 canola contracts traded Thursday, down from the 36,267 contracts that changed hands during the previous session. Of the contracts that changed hands, 15,628 were spread related.
No milling wheat, durum or barley contracts were traded.
Prices are in Canadian dollars per metric ton
