ICE Canada Lower On Overvalued Talk

Canola saw a moderate trade with greater overnight activity than has been evident in the past week. As of 08:28 CDT, an estimated 1,932 contracts had trade with Nov being the focus of the activity.

Canola was pressured down from the outset of activity in the overnight trade on ideas that recent firmness has left it overvalued against competing oilseeds.
The more favourable growing conditions forecast for western Canada through the end of the month also weighed on prices, traders said.

Traders also noted that crush margins have dropped sharply and that slowed demand.
Hanging over the market was steady country selling with farmer activity noting a modest increase, said cash dealers.

However traders also noted that uncertainty about the crop and the high variability of crop
conditions was making it difficult to get a strong sense about crop size and quality and that has sidelined participants.

"No one feels comfortable about their (2209-10) supply-demand balance sheets right now," said a broker.

Canola is expected to ultimately follow the US soybean complex higher on Friday as the US soy complex is expected to rally at the opening of the North American trading session.
However the gains in canola are expected to be restrained by the fact that canola is at a premium to the soybean market.

"That premium in canola might be justified,’ said a broker, " but right now we just don’t know for sure.".

Giving some support is talk of export interest as well.
Giving support on Thursday was talk of Chinese buying interest and exporters have confirmed that they have " a few cargoes" of canola on the books for China for the new crop.

Weighing on the market, longer term, is the expectation that farmer selling will accelerate as the crop improves and that farmer selling will be reasonably strong ahead of the new crop harvest.
The Canadian dollar is also seeing small gains this morning and that will also weigh on values helping to mute any canola strength.

Western barley is untraded and unchanged. However traders have noted increased willingness to sell by farmers as the amount of feed increases following recent rains.
Ideas that barley is still overvalued against US corn and DDGS will also weigh on the market, analysts said.

Prices at 08:45 CDT in Canadian dollars per metric ton: