ICE Canola A Bit Lower On Sluggish Demand

Canola saw only light activity overnight with an estimated 705 contracts traded as of 08:41 CDT.

Canola posted small declines with some follow through selling from Wednesday’s losses and the continued lack of fresh demand contributing to weakness, despite a firmer tone in international vegetable oil prices overnight. Also weighing on canola is the firm Canadian dollar as it continues to trade above the US$0.91 level.

However, traders do feel that canola is now oversold and expect to see canola move higher as the North American trading session opens Thursday morning and the Chicago Board of Trade soybean market rallies. Farmer selling remains slow and that is also felt to be supportive. The gains though are expected to be small with the market under continued selling pressure from bearish technical signals.

Technicians note that the market is holding at support levels on the charts, but that they expect Nov canola to test support at $405 and possibly at $400.

Weather continues to be favourable in the short term and that will also weigh on the market. Sluggish export demand and weaker crush margins also will limit any strength in the market, traders said.

However, long term weather forecasts issued on Wednesday suggest below normal temperatures for key growing regions of Alberta and Saskatchewan in August. Some traders noted that the forecast is troubling given that the crop is about 2 weeks behind in development makijng it vulnerable to a seasonal frost. Cropcast also suggested that rain delays will be a feature of this fall’s harvest in western Canada.

Western barley was untraded and unchanged overnight. The market is expected to be under pressure today from an expected lowering in the Pool Return Outlooks for feed wheat and feed barley from the Canadian Wheat Board this afternoon.

Prices at 08:41 CDT in Canadian dollars per metric ton: