ICE Canada Review: Canola Drops As Buying Dries Up

Canola futures had started the session off with losses, with weakness associated with the declines seen overnight in Malaysian palm oil, European rapeseed and e-CBOT soybean values, traders said. Losses in CBOT soybean and soyoil futures with the start of the North American day session also sparked some weakness in canola, brokers said.

Canola values, however, managed to rally to higher ground when soybean and soyoil futures at the CBOT began to move up, traders said. The early pull-back in the value of the Canadian dollar had also sparked some buying interest in canola.

However, once the highs for canola were hit, the buying interest in canola dried up, traders said. The lack of follow through buying was attributed in part to the covering of recent export business with Pakistan.

Export sources confirmed that at least two cargoes of Canadian canola were sold to Pakistan last week for an unspecified delivery date. Price details were not available.

The surfacing of some hedge orders from elevator companies helped to undermine canola with chart-based speculative liquidation contributing to the downward price slide experienced by the commodity, traders said.

The Canadian dollar also recovered from the lows of the day, helping to remove some of the support that had spilled over into canola.

Large domestic supplies of canola and the ample world global oilseed situation were also viewed as undermining price influences.

There were an estimated 7,966 canola contracts traded Tuesday, up from 6,580 during the previous session. Of the contracts traded, 3,536 were spread related.

Western barley futures were little changed although the nearby March contract did see some minor volume. Light commercial selling ran into some minor commercial bids, leaving values little changed, traders said.

An estimated 18 barley contracts changed hands during the session. On Monday, no barley contracts were traded.