ICE Canada Review: Canola Rally Fizzles

A major portion of the volume total in canola consisted of spreading, with the large index funds seen rolling out of their March canola futures and into the May and July contracts, brokers said.

Canola had found some early support from the advances seen overnight in Malaysian palm oil and European rapeseed futures. Talk of some fresh demand coming forward also had prompted some buying early in the session, traders said.

Oversold price sentiment had also influenced some minor support with the reluctance of western Canadian producers to deliver canola into the cash pipeline also influence some underlying support.

However, once the buying in canola ran out of steam it didn’t take much in the way of selling to push values to the downside, traders said.

The losses in the CBOT soybean complex prompted much of that downward price slide with chart-related selling adding to the price weakness in canola.

The large global oilseed supply situation helped to weigh on prices with talk of large on farm canola stocks in western Canada adding to the bearish price atmosphere, brokers said. Statistics Canada will release a grain and oilseed stocks in all positions report on Friday, February 5.

There were an estimated 17,854 canola contracts traded Wednesday, up from 17,484 during the previous session. Of the contracts traded, 12,074 were spread related.

Western barley futures were mainly higher with a light pick up in commercial demand and the absence of willing sellers accounting for much of the upturn in prices, traders said.

An estimated 36 barley contracts changed hands during the session. On Tuesday, 80 barley contracts were traded.