WCE close: Canola down on large supply, slow demand

(Resource News International) — Winnipeg Commodity Exchange grain and oilseed
futures closed Wednesday’s session mainly lower with canola pressured down by the
large canola supply and the sluggish pace of demand, brokers said.

Canola saw an active trade with intermonth spreading augmenting activity.
Commercials rolling Nov contracts before the contract becomes the cash month
accounted for the bulk of the spread trade although there was some light commodity fund
rolling noted as well.

Total canola volumes were estimated at 18,906 contracts, up from Tuesday’s
16,037 contracts, including an estimated 11,994 contracts that were involved in the
spread trade.

Canola futures ended lower as the market was undermined by the sluggish pace to
export demand in the face of large supplies in Western Canada. The Canada Grain
Commission pegged visible canola supplies at 1.307 million tonnes last week, up from
974,000 at the same time last year. “With no demand, where is all this canola going to
go?” said a trader.

The firm Canadian dollar, bearish technical signals and steady country pricing
contributed to the weakness.

Underpinning canola prices were gains in Chicago Board of Trade soyoil futures
for most of the session, analysts said. When soyoil turned lower, canola’s losses
intensified.

Crushers were the best buyers with routine exporter pricing noted. Early local and
commission house buying turned into selling by the close. Elevator company hedge
selling was noted as was pricing of forward delivery contracts by farmers, cash dealers
said. They added that farmers need to price the basis contracts by the end of the month
and with the market falling they are covering them now.

Commodity fund selling appeared today, with traders estimating their selling at
1,000 to 1,500 contracts.

Western barley futures posted losses in light trade. Weakness in CBOT corn and
the sluggish pace to demand allowed the market to fall, brokers said. End user buying
met mainly commercial selling.

The total barley volume was estimated at 536 contracts, down from 960 contracts
on Tuesday.

Feed wheat was little changed with no activity reported. “There’s little interest in
this market and no one wants to trade it,” said one trader.