ICE Canada Review: Chart Liquidation Undermines Canola

The strong Canadian dollar Monday helped to weigh on values as did weakness in global crude oil futures.

Volumes in canola were described as fairly good, but trade was slowed by the closure of the US markets for Martin Luther King Jr., Day.

Some of the early weakness displayed by canola was inspired by the losses seen overnight in European rapeseed and Malaysian palm oil futures, brokers said.

The downward price movement in canola also reflected the pending harvest of the extremely large soybean crops in Brazil and Argentina. Large domestic supplies of canola and the reduced demand from the domestic processing sector helped to weigh on canola, traders said.

Weakness in canola was also tied to steady levels of elevator company hedge selling, with producers now expecting the world oilseed sector to extend its recent downward price trend.

The downward price action seen in canola was slowed somewhat by the steady vessel lineup at Canada’s west coast and sentiment that export demand has picked up to locations other than China, brokers said.

Spreading was a feature of the activity in canola and helped to augment the volume total.

There were an estimated 10,701 canola contracts traded during Monday’s trade, up from 7,581 during the previous session. Of the contracts traded, 4,664 were spread related.

Western barley futures were steady to lower in fairly light activity. Much of the downward price action reflected the warm temperatures that have hit the Canadian prairies over the past week and were seen continuing over the next couple of days. The warmer weather was seen reducing livestock feed rations by end-users, brokers said. The strong Canadian dollar was also seen as an undermining price influence.

Activity in barley was a light two way affair between commercials.

An estimated 100 barley contract changed hands during the session. On Friday, 5 barley contracts were traded.