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Canola futures on the Intercontinental Exchange (ICE) staged a recovery on Wednesday, erasing earlier session losses after a news report suggested that Russian President Vladimir Putin is weighing options to escalate the ongoing conflict with Ukraine. The geopolitical development injected a fresh risk premium into agricultural commodity markets, lifting canola and other oilseeds.
European rapeseed futures closed higher in sympathy, while competing vegetable oils posted mixed results. Chicago Board of Trade soyoil ended the session lower, and Malaysian palm oil also remained on the defensive, failing to track the gains seen in canola.
In the energy complex, crude oil prices were essentially flat as traders weighed competing headlines. Reports that Iran and Oman have reached an agreement to establish a new shipping lane through the Strait of Hormuz — a critical chokepoint for global oil shipments — were partly offset by supply concerns stemming from Canadian oil sands. Producers announced that output next month will be reduced by 300,000 barrels per day due to scheduled maintenance work.
The Canadian dollar weakened in afternoon trade, giving up more than one-tenth of a US cent compared to Tuesday's close, providing additional support to canola priced in the loonie.
Trading activity in canola eased from the prior session. A total of 50,979 contracts changed hands on Wednesday, down from 70,530 contracts on Tuesday. Spreads accounted for 25,278 of the day's total volume.
Source: The Western Producer