Canadian canola futures soar high on soya rally

Canadian canola futures jumped more than 3 percent on Friday to the highest level since July 2008, supported by a soyabean futures rally triggered by a surprisingly low soya seeding forecast by the US government, traders said. The US Department of Agriculture projected intended soya plantings at 73.902 million acres (29.91 million hectares), below the average analyst estimate of 75.393 million acres.
Lower US soya production would likely boost demand for the competing oilseed canola, traders said. Canola futures spiked after the data was released on Friday morning, held level near new highs during much of the session, then spiked even higher in the final hour of trade.
Farmers were moderately active sellers at the higher prices, but that pressure was more than offset by strong demand domestic crushers and exporters, traders said. Futures supported late by speculator short covering, hedge lifting and buying by managed funds. Numerous chart-based buy stops were triggered in the advance, traders said. May canola settled up $19.20, or 3.2 percent, at $622.50 per ton. It was the largest daily percentage gain and absolute price gain since March 17, 2011, and the highest settlement for a front-month contract since July 18, 2008. The front-month contract gained 4 percent this week, 7.7 percent this month and 18.4 percent in the quarter.
July canola ended up $18.70, or 3.1 percent, at $619.90 per ton. The May-July spread traded 8,008 times, bolstered by rolling of longs by index funds, with May settling at a $2.60 premium to July. The July-November spread narrowed slightly to a July premium of $44.70, trading 2,669 times. CBOT May soyabeans rose 47-1/2 US cents, 3.5 percent, to a 6-1/2 month high of US $14.03 per bushel, bolstered by the USDA report.
MATIF May rapeseed rallied 1.76 percent. The Canadian dollar was trading at $0.9975 against the US dollar, or US $1.0025, at 2:50 pm CDT (1950 GMT), down from Thursday's close at $0.9967 against the US currency, or $1.0033. US light crude oil was up 0.33 percent to US $103.12 per barrel.