ICE Canada Grain/Oilseed Review: Canola Falls On Slow Demand

Canola saw a good volume of trade with much of the activity being intermonth spreading by commodity funds and commercials.

The total canola volume was estimated at 16,512 contracts, up from 12,057 contracts on Monday, including an estimated 14,382 contracts involved in the spread trade.

Canola was a bit higher in the overnight market, reflecting gains in international vegetable oil markets. However, canola turned lower ahead of the opening of the North American trading session as outside markets, including equities and crude oil, fell. Canola maintained its losses as the North American trading session opened and the Chicago Board of Trade soy complex posted losses. Canola ended modestly lower.

Canola was mainly pressured down by sluggish fresh export demand as Chinese demand has dropped off as they begin the harvest of their own rapeseed crop in May, said exporters. They indicated that canola prices would have to drop back to near the $400/metric ton level to attract in fresh export interest.

Losses in CBOT soyoil, the firm Canadian dollar and lower crude oil markets weighed on canola as well. The large supply of canola being held by farmers also contributed to the bearish tone. Technical factors have turned negative on the inability of the May and July contracts to challenge resistance at C$440.00.

Underpinning the market was slower farmer selling and continued uncertainty surrounding 2009 Canadian canola seedings. The large canola export lineup for April is felt to be factored into the market already.

Routine exporter and crusher buying met commercial and speculative selling. Elevator company selling was described as steady. The speculative component was comprised of local and commission house trade, analysts said.

Western barley futures dropped sharply in active trade with intermonth spreading by commercials accounting for much of the volume. The lack of end user demand, large on farm barley supplies and the declines in CBOT corn pressured the market down, triggering some stop loss selling, brokers said.

The total barley volume was estimated at 2,480 contracts, up from Monday’s 294 contracts, including an estimated 1,706 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: