ICE Canola Falls On Weak US Soy

Canola saw a light to moderate trade with intermonth spreading augmenting volumes. Positioning was noted ahead of Thursday morning’s Statistics Canada crop production report.

The total canola volume was estimated at 17,812 contracts, down from Tuesday’s 24,666 contracts.

Canola was mixed to lower in the overnight session , prompted by the soft tone in international vegetable oil prices. Canola maintained its losses as the North American trading session got underway and the CBOT soy complex opened lower. Canola ended the day with small losses.

Canola was pressured down by the moderate declines in CBOT soy complex futures and sluggish fresh export demand. The uncertainty surrounding canola export sales to China also weighed on values. However traders did note they have been told that the problem is "front and center" in the discussions this week in Beijing between Canada’s Prime Minister Stephen Harper and Chinese officials.

Ideas that the market needed to correct lower also weighed on prices. Expectations that tomorrow’s StatsCan crop report will show a large canola crop in 2009 also pressured the market down.

The declines in canola were much smaller than the US soy complex as farmer selling was very light. Cash dealers indicated, except for some delivery contracts, farmers are not going to be sellers until the new year.

Favourable crush margins and strong crusher demand is also giving support to the market, traders said. They indicated that crushers are reducing their dependence on the US market for canola meal where the finding of salmonella in canola meal exports has halted shipments into the US.
Sources indicated that more canola meal is moving to Asia.

The weaker Canadian dollar was also viewed as a friendly market influence helping to offset the big declines in the US soy complex.

Crushers were the best buyers while routine exporter pricing was noted. The selling was mainly commercial.

Western barley was untraded and unchanged. The only interest in the market was some end user bidding well under Tuesday’s close, said brokers .

Prices are in Canadian dollars per metric ton: