ICE Canola Contracts Ease As Demand Fades

"It appears canola is searching for demand and not finding any," a broker said. The absence of fresh export demand was evident and was a factor in the price declines, they said.

Good commodity fund sell orders above current price levels also helped to keep canola on the defensive, brokers said.

Adding to the price weakness in canola was sentiment that area planted to the crop will be significantly higher than what was originally forecast, analysts said. Mostly favourable weather conditions for the canola crops already planted in western Canada also contributed to the price weakness.

Some underlaying support in canola was coming from the gains seen in Malaysian palm oil and Matif rapeseed futures overnight. The firmer start in CBOT soybean and soyoil values also provided some underlying support.

Underlying strength in canola was also coming from delays in seeding the remainder of the canola crop in western Canada due to excess moisture, traders said, noting that yield potential may be reduced due to the late seeding. However, other traders felt there was plenty of time for the crops to be planted and that any delays in seeding due to moisture will be minor.

The absence of significant hedge offers from elevator companies, as producers remain reluctant to deliver into the cash system, also provided some underlying support for canola.

There were an estimated 4,584 canola contracts traded at 10:30 CDT. Of the contracts traded, 2,136 were spread related.

There were 9 western barley futures traded as of 10:30 CDT. The unloading of positions in the July contract by commercial accounts made up the volume total, brokers said.