ICE Canola Drops On Profit-taking, Demand Decline

Sharp declines overnight in e-CBOT soybean, Malaysian palm oil and Matif rapeseed futures helped to spark the selling interest in canola.

Adding to the declines in July and November were ideas that values were overbought and in need of a downward correction, brokers said. Elevator company hedge selling also helped to fuel the lower price move.

Declines in CBOT soyoil futures were contributing to the weakness in canola although an upturn in CBOT soybean values did temper the downward price slide.

The demand drop off came from both the domestic and export sectors, traders said. Processor demand for canola has declined given that margins have declined about C$40 a metric ton over the past week.

Exporters have also backed away from the canola market other than to cover some routine business, brokers said.

Improved weather for seeding progress was also believed to have stimulated some selling interest in canola. However, some participants pointed out that many fields in eastern Saskatchewan and Manitoba were too wet to allow machinery on and will require at least another few days of hot and dry conditions before seeding can get underway.

The retreat of the Canadian dollar versus the US dollar was supportive for canola but brokers noted the currency is still considerably higher on the week.

There were an estimated 3,097 canola contracts traded at 10:40 CDT. Of the contracts traded, 1,682 were spread related.

At 10:40 CDT, no western barley future had changed hands.

Prices in Canadian dollars per metric ton at 10:40 am CDT: