ICE Canada Review: Canola Corrects Lower

Declines in CBOT soyoil helped encourage the selling in canola, with fund long-liquidation a feature, according to traders. Some of the weakness was tied to concerns that the high rate of inflation in China would cause the country to put in measures to slow economic growth. Any moves to curb inflation on China’s part could also cut into the country’s demand for commodities, including canola.

While domestic crusher and exporter pricing did temper the declines in canola, the commercial buying was relatively lacklustre and only on a scale down basis, said traders. Crush margins remain favourable overall, but the recent strength of the market was said to be leading to some nearby rationing of demand.

Recent rains in Argentina added to the bearish tone in canola.

Steady farmer hedges also put some downward pressure on canola, although the farmer selling was not very aggressive on Thursday as producers still remain bullish overall.

A weaker tone in the Canadian dollar helped limit the weakness in canola, according to traders. The tight supply situation also remained supportive overall. In addition, the turn higher in CBOT soybeans in the final minutes of trade also provided some spillover support.

About 22,242 contracts were traded on Thursday, which compares with Wednesday when an estimated 17,601 contracts changed hands. Spreading accounted for about 9,974 of the contracts traded.

Western barley futures were untraded and unchanged.

Settlement prices are in Canadian dollars per metric ton.