ICE Canola Falls On Weak Vegetable Oil Prices

Canola saw very light activity with trade expected to be quiet again today, said traders.
As of 08:35 CDT only 155 contracts had been traded.

Canola was pressured down by the overnight weakness in Malaysian palm oil markets and losses in soybean oil values. Traders expect canola to maintain declines as the North American trading session gets underway with the Chicago Board of Trade soy complex forecast to open lower.

Contributing to the weakness in canola will be the very strong Canadian dollar as it has seen gains of as much as 1 cent this morning on the firm tone in commodities.
"I think it is going to be tough for canola to see any strength today with the dollar now over the US$.91 level", said a broker.

Also pressuring the canola market down will be the favourable growing conditions through the end of the month with weather forecasts predicting near ideal growing conditions for the crop.

Sluggish demand will also contribute to the weakness as buyers remain sidelined by the general crop uncertainties in western Canada.
"I know that most analysts are looking for China to take at least 1 mln metric tons of canola in 2009- 10, but so far they have only picked up a handful of new crop cargoes," said an exporter.

Losses will be minimized by the lack of farmer selling as producers are holding onto their supplies until they have a better idea about the canola crop size this year, cash dealers said.
Cash bids have remained firm as a result.

There was little other fresh news in the market.
Technically the market is holding at support levels, said technicians.

Western barley is likely to work lower today as the expected losses in CBOT corn futures and the feeling that barley remains overvalued will weigh on prices. Expectations for the Canadian Wheat Board to lower feed wheat and barley prices in Thursday’s Pool Return Outlooks also will weigh on prices, brokers said.

Prices at 08:35 CDT in Canadian dollars per metric ton: