ICE Canola Eases On Vegetable Oil Losses

Overnight declines in vegetable oil markets, including e- CBOT soybeans, Malaysian palm oil and European rapeseed values, weighed on canola prices in overnight activity.

Selling was also influenced by expectations that Chicago soybeans will open with small losses when the North American trading session begins, brokers said.

The canola market’s downward price slide was limited, however, by the firm overnight tone in stock markets and crude oil futures, although both have since moved into negative territory.

The pullback of the Canadian dollar was also a bullish price influence. In early trade, the currency had already slipped over 1 US cent lower.

Canola will find additional support tied to concerns about cold weather across western Canada. A weather premium has already worked its way into the market but it could grow if weather scares continue to generate uncertainty about the 2009/10 canola crop.

Temperatures dipped below freezing in parts of Manitoba overnight, frost warnings were issued in some Saskatchewan areas while Alberta also experienced unusually cold overnight weather.

Routine exporter pricing and the slow pace of farmer selling will provide a floor for canola contracts as well.

Canola will struggle though if outside markets weaken and soybeans trade lower ahead of the weekend.

The lack of fresh export business and talk that China has backed away from the market will further undermine prices. News that China cancelled old crop soybean shipments is stoking fears they will do the same thing for Canadian canola, market watchers said.

As of 9:08 CDT, 1,618 canola contracts had been traded.

There were no western barley futures traded as of 9:08 CDT.

ICE Futures Canada announced late Thursday that they have received approval to list a new Western Barley futures contract.

The current Western Barley futures contract months from March 2010 onward are to be delisted immediately. July09, October09, and December09 contracts will remain listed, ICE Futures Canada said.

The main change is a shift in the contract delivery area from Saskatchewan to southern Alberta, where the western Canadian livestock feed industry is concentrated.

The contract was revamped in order to encourage more interest in the often thinly traded market.

Prices in Canadian dollars per metric ton at 9:09 CDT: