ICE Canola Drops On Large Production Expectations

Statistics Canada pegged Canada’s 2010/11 (Aug/Jul) canola crop at 10.867 million metric tons Friday morning, which was at the high end of trade estimates. While the production was still down from the year ago level, traders noted that improved crop conditions over the past month will likely result in larger yields when the harvest is eventually completed.

In addition to the StatsCan related weakness, canola was also being pressured by calls for early declines in the CBOT soy complex, according to traders. Overnight declines in Malaysian palm oil futures were another bearish price influence.

The Canadian dollar was weaker Friday morning, helping limit the declines in canola, according to traders.

Steady exporter demand underneath the market was also expected to provide some support.

About 9,800 canola contracts had traded as of 8:44 CDT.

Western barley futures were untraded and unchanged Friday morning. Traders said the StatsCan report was bearish for barley, with estimated 2010/11 production of 8.488 million metric tons coming in well above trade guesses. However, strength in the international feed grain markets should be supportive.

Prices in Canadian dollars per metric ton at 8:44 CDT: