ICE Canada Review: Optimal Weather Undermines Canola

The recent precipitation was said to have replenished dry soils across most of the Canadian prairies, while the return of warm temperatures was helping with seeding operations as well as giving already planted crops an excellent start, brokers said.

Some early selling in canola came from the declines posted overnight in Malaysian palm oil futures and from bearish chart signals. The continued upswing in the value of the Canadian dollar was also an undermining price influence, traders said.

Declines in CBOT soyoil futures for the bulk of the North American day session helped to influence some of the weakness in canola. The late downturn in CBOT soybean values also encouraged some minor selling interest.

The absence of fresh export business being put on the books added to the bearish price atmosphere in canola, traders said.

The declines in canola were offset in part by the pricing of old export business to Japan by commercials at the lows of the day, brokers said. Domestic processors were also noted buyers of canola, but only at the lows.

The weakness in canola was also restricted by ideas ongoing crop production problems in China will ultimately result in that country coming forward to book Canadian canola, traders said.

"China has already bought US soybeans and corn, so it may only be a matter of time before they come to Canada for some canola," a broker said.

A drop off in farmer sales to the cash pipeline provided some underlying support for canola, especially as producers now begin to concentrate on spring seeding rather than marketings, brokers said.

There were an estimated 6,772 canola contracts traded Thursday, down from 10,341 during the previous session. Of the contracts traded, 3,648 consisted of spreads.

Western barley futures were untraded and unchanged Thursday.

No barley contracts changed hands during the session. On Wednesday, no barley contracts were traded.