ICE Canola Down On Bearish StatsCan Report

Canola saw an active trade with intermonth spreading only moderate as an estimated 9,570 contracts had traded by 10:55 CDT.

Canola losses were modest with the market pressured down by this morning’s Statistics Canada crop production report which pegged 2009 canola output at 11.8 mln metric tons, at the top end of trade forecasts and up from the previous StatsCan estimate of 10.3 mln tons.

Underpinning the market was the slow pace to farmer selling, the weak Canadian dollar, profitable crush margins and export demand, brokers said. The export demand was mainly routine with Japan and Mexico felt to be in the market, traders said.

Talk that canola is being loaded into a vessel at the West Coast destined for China gave support to prices on ideas that the embargo against Canadian canola imports by China because of Blackleg infestation may have been resolved.
Grain trade sources feel this is the beginning of a large canola import program by China. Traders feel the resolution of the trade dispute was achieved by Prime Minister Stephen Harper who is currently visiting Beijing.

"Canola should be down C$10.00 per (metric) ton on this morning StatsCan report and we keep bouncing back to unchanged…something is up", said one trader.
"If you look at the news coming out of China, it looks like (Prime Minister) Harper is eating crow in Beijing after 5 years of the (Canadian) government being critical of China", he added.

Commercials have been the main participants on both sides of the trade with some speculative selling noted early. However brokers noted that some of that speculative short selling has been bought back as traders are nervous about the better-than-expected
performance of the market.

Western barley is unchanged in very dull trade. There was little fresh news to drive the market.
The total barley volume as of 11:05 CDT was estimated at 13 contracts.

Prices at 11:05 CDT in Canadian dollars per metric ton: