ICE Canola Down On Continued Fund Selling

Canola saw a moderate trade with only light intermonth spreading.

The total canola volume was estimated at 9,574 contracts, down from Tuesday’s 10,259 contracts, including an estimated 942 contracts involved in the spread trade.

Canola was lower in the overnight session, reflecting general weakness in international vegetable oil markets. Canola extended its losses as the North American trading session got underway and the US market posted losses. Canola ended the day moderately lower.

Canola was mainly pressured down by aggressive commodity fund liquidation selling with bearish technical signals also weighing on the market. "The funds are just running for the hills and they don’t seemed to be worried about how bad the price is…they just want out of this (canola) market," said a broker.

Rains in dry areas of Alberta and Saskatchewan pressured prices down as did a statement from Viterra, Canada’s largest grain company, that, despite the drought, overall western Canadian grain yields are in "the normal range".

Underpinning the market was the lack of farmer selling and ideas the market is oversold and due for a bounce. Traders also noted that the market is not trading its fundamentals, but reacting simply to the aggressive fund selling. "It doesn’t matter what Viterra says, the canola crop is hurting," said one trader.

Exporter and crusher scale down buying met heavy commodity fund and commission house selling with only light commercial offerings noted. Traders estimated fund selling at 4,000 Nov contract.

Western barley ended mixed in light trade.
Liquidation selling characterized the trade in the Oct contract as the contract can not be arbitraged against the new Nov contract. "Traders just need to get out of the Oct (barley contract)," said a trader. The Nov contracts were supported by the lack of farmer selling.

The total barley volume was estimated at 196 contracts, up from 66 contracts on Tuesday.

Prices are in Canadian dollars per metric ton: