ICE Canola Falls As Funds Sell Again

Canola volumes were moderate with intermonth spreading once more a minor part of the trade.

The total canola volume was estimated at 10,259 contracts, up from Monday’s 8,529 contracts, including an estimated 916 contracts involved in the spread trade.

Canola was higher in the overnight session as strength in international oilseed markets and gains in crude oil gave support. Canola turned lower as the North American trading session got underway and the Chicago Board of Trade soybean market dropped sharply. Canola was sharply lower for most of the session but came off its lows in the last 90 minutes as speculative selling faded.

Canola was pressured down mainly by speculative selling. Bearish technical signals, significant rainfall for Alberta and Saskatchewan and losses in the energy markets all weighed on prices sending the market to its lows about 11:30 A.M. CDT.

However after that the speculative selling slowed and farmer selling was virtually non existent and that allowed the market to rally off its lows. Farmer selling has been sidelined by the fact that cash bids have dropped below the significant $10.00/bu level in much of western Canada, said cash dealers. The weak Canadian dollar, ideas that canola is oversold and talk that the rain will only halt the deterioration of the canola crop and not improve its condition all contributed to its bounce from its lows, traders said.

Commercials were steady buyers, particularly after the market started to bounce back, with both exporters and crushers buying. The selling was mainly speculative with only light commercial selling evident. Commodity funds were strong sellers in the first half of the session as they were thought to have liquidated as many as 4,000 Nov contracts. Commission house selling was also noted.

Western barley ended lower in light trade. Ideas that barley was overvalued against other livestock feeds pressured the market down. Commercials dominated the trade. Rains benefitting crops also pressured the market lower.

The total barley volume was estimated at 66 contracts, up from 41 contracts on Monday.

Prices are in Canadian dollars per metric ton: