ICE Canada Grain/Oilseed Review: Canola Follows Soybeans Down

Some of the activity seen in canola throughout the day was said to be the evening up of positions ahead of the weekend.

Canola futures moved lower early in the session with much of the selling fueled by the declines posted overnight in e-CBOT soybeans, Malaysian palm oil and Matif rapeseed futures. Canola also came under downward pressure when CBOT soybeans, soyoil and soymeal all moved lower with the start of the North American day session, traders said. The losses in the CBOT markets were maintained much of the day.

Contributing to the price weakness in canola was the drop off in demand, with domestic crushers and exporters both backing away from the market. Figures from the Canadian Oilseed Processors Association showed that crushers were only working at 45% of their capacity during the week ended June 3, which was down sharply from last week’s 65% pace and the year ago level of 92%.

The lack of new export business reflected the fact that China has pulled out of the market for global oilseeds, brokers said.

Underlying support in canola, meanwhile, came from the slow pace of farmer deliveries and from ongoing concerns about frost damage to the crop earlier this week and the potential for some additional freezing temperatures on the weekend across the Canadian grainbelt, brokers said.

The routine pricing of export business to Japan and Mexico also helped to ease the price declines in canola.

A lot of the action seen in canola was the rolling out of July positions and into the November future.

There were an estimated 14,218 canola contracts traded during Friday’s session, down from 25,627 during the previous session. Of the contracts traded, 11,480 were spread related.

Western barley futures were slightly firmer with most of the upside coming in the last few minutes of the session. Light commercial demand in the absence of willing sellers accounted for western barley futures posting some minor gains, brokers said.

However, most market players were now waiting for changes to the barley contract by ICE Futures Canada to come into effect on June 22. The changes were being made to better reflect the domestic barley market in Western Canada.

An estimated 39 barley contracts changed hands during the session. On Thursday, 74 barley contracts were traded. Of the contracts traded on Friday, 36 were spread related.