ICE Canada Review: Profit-taking undermines canola

Some evening up of positions ahead of the upcoming September Labor Day holiday weekend was a feature of the activity. Both the US and Canadian markets will be closed. Statistics Canada will also release its grain stocks in all positions report as of July 31 on Wednesday, September 8.

Canola contracts for the second session in a row traded on both sides of the plus/minus line during the day.

Some of the downward price action in canola reflected profit-taking and sentiment that the gains seen on Wednesday were overdone. Weakness in CBOT soybean and soyoil futures for the better part of the day also helped to encourage some of the price weakness in canola as did steady hedge selling by grain companies, traders said.

The lack of fresh export demand further weighed on prices.

Some chart related liquidation orders added to the bearish price sentiment.

Underlying support in canola, however, continued to come from steady domestic crusher demand and the pricing of old export business to Japan and Mexico, brokers said.

Weather uncertainties in western Canada helped to underpin canola especially with there being concerns the crop is very vulnerable to frost damage. Some weather outlets were warning about the potential for light frost activity during the weekend in parts of Manitoba and Saskatchewan. Cooler temperatures next week were also forecast for the Canadian prairies which could result in some frost damage, brokers said.

Spreading was a feature of the activity and helped to bolster the volume total.

There were an estimated 13,568 canola contracts traded Thursday, down from the 18,127 contracts that changed hands during the previous session. Of the contracts traded, 7,886 were spread related.

Western barley futures were unchanged and untraded on Thursday. On Wednesday, 50 barley contracts changed hands.