ICE Canada Review: Canola Drops On Outside Uncertainty

Some of the uncertainty was influenced by the US Securities Commission decision last week to charge Goldman Sachs with fraud. Reports of other such companies being brought up on similar charges has also created concerns among market participants.

Traders said companies like Goldman Sachs handle a lot of speculative hedge funds, and there are ideas that these participants have been bailing out of all kinds of commodities in order to preserve financial gains.

Canola contracts were pushed lower early by the losses seen in Malaysian palm oil futures overnight and by the price declines experienced by CBOT soybean and soyoil values during the North American day session, traders said.

Sentiment that canola acreage in western Canada will come in at ‘startling’ levels also influenced some selling. Statistics Canada will release its first look at Canadian seeding intentions on April 26.

Adding to the price weakness were the favourable weather conditions for spring fieldwork and planting operations in western Canada.

Speculative accounts were some of the featured sellers of canola during the day.

The losses in canola were being offset in part by the weak Canadian dollar, which was causing domestic crushers to step up to the plate and start buying, brokers said. The pricing of old export business to Japan helped to influence some underlying support for canola.

A drop in the level of hedge offers hitting canola from grain companies also generated some minor support.

There were an estimated 11,364 canola contracts traded Monday, down from 38,984 during the previous session. Of the contracts traded, 8,428 contracts were spread related.

Western barley futures saw some activity Monday with most of the action believed to be the unloading of positions by commercial accounts, brokers said. The nearby May future was offered lower at the close.

There were 16 barley contracts that changed hands during the session. On Friday, no barley contracts were traded.