ICE Canola Falls As Harvest Begins

Canola saw a moderate trade with very light intermonth spreading.

The total canola volume was estimated at 12,138 contracts, down from 15,270 contracts on Tuesday.

Canola was lower in the overnight market as international vegetable oil prices were weaker. Canola held its losses as the North American trading session got underway and the Chicago Board of Trade soy complex posted losses. Canola maintained its losses throughout the session ending lower.

Canola was pressured down by increased country movement as farmers clean out their bins ahead of the harvest.
The need for cash flow is also stimulating selling, said cash dealers. Weakness in CBOT soy complex futures and the favourable weather outlook also pressured the market. Analysts noted that most traders are revising their canola crop estimates higher because of the better weather and that also weighed on prices.

Bearish technical signals prompted some selling with technicians now looking for a test of the C$400/metric ton level in the Nov contract. However, traders feel that there is considerable exporter buying in the $390-$400 level in the Nov contract and that will supply a floor for the market.

Giving some support is the softer tone in the Canadian dollar and ideas that, even with slightly better yields, demand will outstrip canola production, brokers said.

Exporters were the best buyers with some crusher buying noted, both on a scale down. The selling came from speculators and commercials with elevator company hedge selling increasing. Commission houses were sellers with some light commodity fund selling also evident.

Western barley ended higher in light activity. The market was boosted by ideas it was oversold after the recent decline and in need of a correction higher. Also supporting values was the fact that Nov contract was at a discount to the southern Alberta cash market which is trading in the $145-$150 per ton range.

Limiting the upside was the advancing harvest and slightly better than expected barley yields, brokers said.

The total barley volume was estimated at 184 contracts, down from Tuesday’s 1,070 contracts.

Prices are in Canadian dollars per metric ton: