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WCE close: Canola mixed on firm loonie vs. soy gains

Winnipeg (Resource News International) — Winnipeg Commodity Exchange (WCE) grain and
oilseed futures closed Tuesday’s session mixed with canola mixed as the very strong
Canadian dollar pressured the market down, but was offset by the late rally in Chicago
Board of Trade soy complex futures, traders said.

Canola saw a moderate trade with intermonth spreading enhancing the level of
activity.

Total canola volume was estimated at 6,165 contracts, down from Monday’s 8,321
contracts, including an estimated 1,282 contracts involved in the spread trade. Canola

options saw an active trade as 700 November 410 puts traded at $5.00-$5.20.

Canola futures were initially pressured down by the strong Canadian dollar and the
weak Chicago Board of Trade soy complex futures, analysts said. Contributing to the
weakness was today’s Statistics Canada July 31 grain stocks report, which pegged canola
stocks at the end of the 2006-07 crop year at 1.82 million tonnes, above trade
forecasts.

However, traders generally dismissed the report, noting that canola demand will be
exceptional this year and that the higher supplies will be easily absorbed. They pointed
to this morning’s report from Germany’s Oil World forecasting Canadian canola exports
at six million tonnes and trade expectations for domestic demand of 4.0 to 4.5 tonnes to pull
2007-08 ending stocks down to “tight” levels.

Underpinning the canola market were friendly technical signals, and the steady
disciplined scale up nature of the farmer pricing despite rapid progress in the harvest. The

late rally in CBOT soy complex futures turned canola narrowly mixed in the last 15
minutes of the session.

The trade was mainly commercial with routine exporter buying meeting elevator
company pricing. Crushers appeared on both sides of the market.

Feed grains ended higher with new contract highs set in feed wheat and barley
futures.

Western barley rallied on the lack of country selling as StatsCan confirmed very
tight end of year supplies in this morning’s report, brokers said. Steady end user demand
absorbed the available hedge selling and that also lifted values with the market ignoring
the weakness in CBOT corn.

The trade was estimated at 1,921 contracts, up from 775 contracts on Monday, with
the bulk of the activity intermonth spreading by commercials.

Feed wheat rallied on a lack of farmer selling as Statistics Canada confirmed very
tight wheat supplies in Canada. The big surge in CBOT wheat also encouraged gains,
traders said. The entire trade comprised of Oct/Dec spreading with the total volume
estimated at 224 contracts, up from Monday’s 39.

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