ICE Canola Falls On Strong Loonie

Canola saw a light trade with intermonth spreading accounting for much of the volume. Activity was limited by the fact that many participants are attempting to assess the canola crop condition and have taken to the sidelines waiting to see the crop quality and quantity.

The total canola volume was estimated at 6,284 contracts, down from Friday’s 9,840 contracts, including an estimated 2,194 contracts involved in the spread trade.

Canola was higher in the overnight session on strength in outside markets but turned lower just after the opening of the North American trading session as the Chicago Board of Trade new crop soybean futures turned lower and the Canadian dollar surged to a 5 week high, traders said.

Canola was also pressured down by sluggish fresh demand and the favorable growing conditions forecast through the end of the month. The lackluster trade contributed to the weak tone. Ideas that canola was overvalued against soybeans, after the soy market saw a large drop in July, added to the weak tone, traders said.

Underpinning the market was the continued uncertainty about the canola crop following this season’s inclement growing weather and the slow pace to farmer selling.

Routine crusher and exporter scale down demand was augmented by light Japanese pricing. The selling comprised of commercial and speculative offerings. Exporters were noted sellers with commission house and commodity fund selling also evident. The fund selling was thought to be continued liquidation of Nov long positions with only 200-300 contracts sold, traders said.

Western barley ended lower in light trade. Liquidation selling sent the Oct contract down while weakness in the southern Alberta cash market undermined the Nov futures contract, brokers said.

The total barley volume was estimated at 35 contracts, down from 60 contracts on Friday.

Prices are in Canadian dollars per metric ton: