ICE Canola Falls As Demand Fades

Canola saw a large volume of trade with most of the activity once again being intermonth spreading by commodity funds and commercials. Many participants took to the sidelines ahead of the Easter long weekend with the ICE Canada market closed until its Sunday evening session.

The total canola volume was estimated at 14,488 contracts, up from Wednesday’s 13,541, including an estimated 11,788 contracts involved in the spread trade.

Canola was higher in the overnight market on the move to 6 month highs by Malaysian palm oil. Canola surged to its daily highs as the North American trading session got underway and Chicago Board of Trade soy complex futures posted strong gains. However, as CBOT soy demand faded and soy prices drifted back to small gains, canola demand also dropped off and allowed the market to turn lower in the last half hour of the session.

Canola was pressured down by slowing demand as exporters indicate that fresh demand is about C$20-$30 per metric ton under the market.
Sluggish canola oil demand contributed to the weakness as did the firm Canadian dollar. Bearish technical signals also weighed on values.

Underpinning the market was the slower pace to farmer selling as spring time road weight restrictions have slowed movement to elevators and crushers, cash dealers said. Also supporting the new crop was uncertainty about canola acres in 2009 as the Canola Council in a speech in Beijing Thursday restated the Ag Canada estimate for 2009 plantings at a record 17.2 mln acres.
Trade forecasts suggest that canola acres will actually fall below last years 16.1 mln in 2009. Statistics Canada brings out its first planted area
report on April 24th.

Routine exporter and crusher buying met light commercial selling.

Western barley bounced to both sides, ignoring the gyrations of the US corn market, ending little changed. The fact that cash bids reside $C20.00 per ton above futures gave some support. However, brokers did note that the level of activity was small and that contributed to choppiness as the market reacted to just small buy and sell orders.

The total barley volume was estimated at 334 contracts, up from 169 contracts on Wednesday, including an estimated 326 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: