ICE Canola Down On CBOT Declines, Large Crop

The nearby November, January and March months were the most active contracts.

Early selling in canola was linked to the declines posted in the e-CBOT soybean complex overnight as well as the losses seen in Malaysian palm oil and European rapeseed futures, traders said.

The downside in canola was helped along by the confirmation of a larger canola crop and ideas that the crop will only continue to grow in size, brokers said.

Statistics Canada in a crop production survey released October 2, pegged Canada’s 2009/10 (Aug/Jul) canola output at 10.269 million metric tons. This was up from the August projection of 9.541 million tons and compares with the 2008/09 crop of 12.642 million.

The estimate was at the low end of pre-report expectations, but most market participants had not expected the government agency to have included the full benefit of a warm September in the production projections. Instead, most feel the Dec 3, 2009 production update from StatsCan will show the full size of the crop. Market participants were still expecting canola output in 2009/10 to topple the 11.0 million ton level, brokers said.

The losses in canola were amplified when the declines in CBOT soybean and soyoil were increased. Some technically based speculative selling, also helped to weigh canola, brokers said.

The prospects of harvesting a large US soybean crop was also considered an undermining price influence in canola.

Reduced domestic crusher demand and pre-weekend hedge selling by elevator companies also contributed to the declines seen in canola.

Some underlying support was coming from the pricing of old export business, brokers said.

The buying back of previously sold positions ahead of the weekend also helped to slow the price drop, brokers said.

There were an estimated 5,884 canola contracts traded at 10:42 CDT.

There were no western barley futures traded as of 10:42 CDT