WINNIPEG (Dow Jones)--Canola futures traded on the ICE Canada platform posted
minor gains during the week ended April 29. A Statistics Canada seeding
intentions report released April 24 forecasting lower-than-expected canola
acres in western Canada pushed canola values higher but gains were eventually
trimmed when news broke about the global outbreak of swine influenza.

  The near-term price direction of the canola market will be tied to seeding
conditions in the U.S., said Keith Ferley, a Winnipeg-based trader for Union
Securities Ltd. Cool, wet weather is forecast and that could mean a slowdown in
corn planting and, as a result, additional U.S. soybean acres.

  "That could negatively influence canola regardless how many acres of canola
we actually get in the ground," Ferley said.

  The StatsCan seeding intentions report forecasting unexpectedly lower canola
acres in western Canada is bullish for the market but its support is muted by
the fact there are still many swing acres left to be decided, Ferley said.

  "Canola prices have come up a long way since that survey was taken and that
could bring acres back into the market," he said.

  It is too soon to say what further impact, if any, swine-flu fears will have
on the canola market, according to Ferley. Although the global flu outbreak
isn't linked to pork consumption, a number of countries have moved to close
their borders to North American pork products. What matters now is whether that
leads to herd culls and ultimately to less soymeal demand, Ferley said.

  "It looks like the worst of the market's reaction may have passed but who
knows what sort of long-term impact it is going to have," he said.

  More definitively, the canola market will be undermined by the Canadian
exchange rate if the Canadian dollar continues to exhibit the same type of
strength it has recently shown.

  "The Canadian dollar looks like it might have further upside to the 85 to 86
US cent range. That's going to hurt us. It hasn't had a big impact yet but if
it keeps on firming, it will," said Ferley.

  He noted, however, that Canadian producers are concentrating on spring
seeding rather than selling and that will provide a floor for canola prices as
will tight supplies of old crop U.S. soybeans.

  From a chart perspective, there is still a friendly bias to canola but the
near-term signals are mainly flat, Ferley said.