ICE Canola Contracts Drop As Buyers Back Off

"It seems that all aspects of the commercial sector, meaning domestic crushers and exporters, have backed away from the market to see just how far canola will drop," a broker said, explaining the price weakness.

Adding to the bearish price sentiment in canola were indications that the size of the crop in western Canada will be larger than first anticipated based on early harvest returns. Market participants had been estimating Canadian canola output at a small 9.0 million metric tons. Those projections have now be raised to around the 11.0 million ton level, traders said.

Some hedge selling by grain companies was also evident and helped to undermine canola futures.

Some of the selling that surfaced was also believed to be chart-related with the losses in some contracts being amplified by the triggering of sell-stop orders, traders said.

The price weakness in canola was also stimulated in part by the declines being experienced by CBOT soybean and soyoil futures.

Some underlying support in canola came from the buying back of previously sold positions and by the pull-back in the value of the Canadian dollar, brokers said.

The squaring of positions ahead of Thursday’s updated supply/demand tables from the USDA was a feature of the activity.

There were an estimated 8,101 canola contracts traded at 10:18 CDT.

There were no western barley futures traded as of 10:18 CDT.