ICE Canola Down On Weak Outside Markets

Canola saw extremely thin overnight trade with volumes picking up in the last half hour as intermonth spreading accounts for the bulk of the activity.
As of 08:30 CST the canola volume was estimated at 3,306 contracts.

Canola was pressured to small losses overnight by slow demand and the weakness in soyoil prices, said traders. Prices continued to see small losses ahead of the North American trading session .
The market was also pressured down by expectations for Chicago Board of Trade soy complex futures to post losses when it opens this morning.

Canola continued to be undermined by slow demand as buyers have backed away in the wake of the very small farmer selling as frigid weather and the approaching holiday season has restricted country movement. The ample supply of canola in western Canada also weighed on prices.

"The canola market bias for now is lower as the market is looking to see how low it will have to go to attract in fresh export demand," said a trader. We saw yesterday (Monday) that canola needs to readjust to the US soybean market where supply tightness and strong demand really shows that soybeans are worth more than canola," he added. On Monday soybeans staged a strong rally while the canola market was marginally lower.

However, traders also noted in the very thin volumes "crazy things can happen" and they felt that canola could see strength after the opening as a soft tone in the Canadian dollar, slow farmer selling and the fact that canola is reasonably priced in the international market could give some support.

Commercials also noted that year end positioning could also lead to choppiness.

Technicians said that the Jan canola continues to trade in a tight range and they continue to wait and see where the break out will come.

Commercials have been the main participants so far in the trade.

Western barley is untraded and unchanged with little interest in the market.

Prices at 08:40 CST in Canadian dollars per metric ton: