ICE Canola Contracts Weaken As Hedging Picks Up

"Hedging by grain companies has been pretty steady and that is putting some downward pressure on canola," a broker said.

Early declines in canola were also influenced by the losses seen in Malaysian palm oil futures overnight.

Losses in CBOT soyoil values with the start of the North American day session contributed to the selling interest seen in canola as did the arrival of much needed soil moisture in Alberta and Saskatchewan. The precipitation was believed to have at least temporarily alleviated dry soil conditions in those two provinces heading into spring seeding, brokers said. As a result, some of the dry weather premium was being removed from canola.

Additional weakness in canola also was linked to the record soybean acreage in the US this spring, the record large supply of soybeans in South America and the record large area that will be planted to canola in western Canada this spring, traders said.

The upturn in the value of the Canadian dollar Monday morning was also an undermining price influence, brokers said.

Some underlying support in canola was coming from the pricing of old export business by commercials and scale-down domestic crusher demand, brokers said.

Much of the activity seen in canola so far has consisted of spreading, traders said. Commodity funds were seen bailing out of the May canola contract and into the July future.

There were an estimated 12,121 canola contracts traded at 10:47 CDT. Of the contracts traded, 9,980 were spread related.

There were no western barley futures traded as of 10:47 CDT.