ICE Canola Down With International Vegoils, Rally Possible

Canola saw a light trade as an estimated 1,543 contracts had traded by 08:47 CDT.

Canola was pressured down by weakness in e-cbot soybean futures after its attempt at a rally failed. Weakness in Malaysian palm oil contributed to the decline as well. Canola is expected to see modest losses as the North American trading session gets underway and the Chicago Board of Trade soybean complex is expected to see small losses.

However, traders feel this will be a "turnaround Tuesday" for canola as "there are signs that the US soy complex will also rally today". Canola will continue to draw support from the lack of farmer selling and further declines in the Canadian dollar. The continued tightness of supply in the cash markets will also help to lift values, they note. However they do not expect to see a strong rally.

Traders indicated that bearish influences are becoming more pronounced and that will limit any upside in the market.
Weather forecasts contain no major frost threat through late next week, they note. Also weighing on the market will be a lack of strong fresh export demand. Technical signals have generally become bearish in recent days and that will also keep canola from sustaining a strong rally. Canola has also entered a seasonal down trend time frame as the harvest has begun in some areas of western Canada.

Brokers indicated that for a strong rally to happen, one of two things have to happen.
A frost has to decimate the crop or China has to come into the market to aggressively buy canola.

Commercials have been the main traders in the overnight trade.

Western barley is lower in light activity. Bearish technical signals and weakness in US feed grain markets weighed on prices.
There was little fresh news in the market and commodity index fund liquidation selling that has sent the Oct contract down C$35/metric ton in the past week is felt to have ended.

The total barley volume at 08:45 CDT is estimated at 25 contracts.

Prices at 08:46 CDT in Canadian dollars per metric ton: