ICE Canola Falls On Swine Flu Panic

The canola volume was moderate with intermonth spreading augmenting activity as index funds and commercials continued to roll their positions forward.

The total canola volume was estimated at 13,575 contracts, down from Friday’s 16,284 contracts, including an estimated 6,130 contracts involved in the spread trade.

Canola was sharply lower in the overnight trading session in reaction to losses in crude oil and international vegetable oil markets, which were all reacting to the fear that swine flu which has been found in Mexico might spread globally and cut into pork demand. Canola continued to see losses as the North American trading session opened with CBOT soy complex tumbling. However, the US soy complex came off its lows and that supported canola pulling values of their lows as well. Canola ended only moderately lower, actually outperforming the US soy market.

Canola was also pressured down by steady country selling as last week’s rally resulted in cash prices rising to levels that attracted in some farmer selling, cash dealers said. However, traders agreed that the main bearish market factor was the "swine flu panic".

Underpinning canola was continued strong demand in the cash market and Friday’s Statistics Canada report which forecast lower canola acres in 2009. The StatsCan
influence was muted by trade ideas that canola acres will be higher than the StatsCan report, but will not climb above last year’s level.

Crushers were strong buyers with exporter buying noted.
Commodity funds were sellers early but becoming buyers later in the session. Commercials accounted for the bulk of the selling.

Western barley ended lower in light commercial trade with most of the activity being intermonth spreading. The general weak tone in other markets weighed on barley.

The total barley volume was estimated at106 contracts, up from 53 contracts on Friday, including an estimated 88 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: