ICE Canola Down On Large Crop

Canola saw a very heavy trade with the bulk of the volume comprised of intermonth spreading as index funds were rolling their Nov contracts into the Jan contract, brokers
said. Positioning was noted ahead of Friday’s Statistics Canada crop production report.

The total canola volume was estimated at 25,746 contracts, up from Monday’s 8,653 contracts.

Canola was lower in the overnight session with the advancing harvest pressuring the market down despite some firmness in international vegetable oil prices. Canola maintained small losses as the North American trading session got underway and the Chicago Board of Trade soy complex opened higher. Canola ended with small losses.

Canola was pressured by the advancing harvest with 76% of the crop harvested, only modestly behind the 78% average. Also weighing on canola were forecasts for large production. On Monday, the president of the Canola Council of Canada, Joanne Bluth, forecast the 2009 canola crop at over 11 mln metric tons, well above the last StatsCan estimate of 9.5 mln. Country movement, mainly against basis and forward contracts,
was steady and that weighed on prices as did the firm Canadian dollar.

The steady choppy tone in the Chicago Board of Trade soy complex had only a minor impact on canola.

Canola did draw support from strong export demand at and just below the C$380 level in the Nov contract.
"The demand at $380 (in the Nov contract) is pretty impressive", said a trader. "They tried to knock down it several times and couldn’t hold the market down", he added. The pace of fresh farmer selling has slowed "considerably", said cash dealers, as cash bids have dropped as low as $7.50/bu, close to the lowest cash bids of the year.

Routine exporter and crusher demand met commercial selling. There was some light speculative selling noted in the market.

Western barley ended steady to lower in light volumes. Trade was confined to liquidation activity in the Oct contract. The lack of activity in the cash market contributed to the lackluster action in the futures market, brokers said.

The total barley volume was estimated at 21 contracts, down from Monday’s 89 contracts.

Prices are in Canadian dollars per metric ton: