ICE Canola Falls With Outside Markets

Canola activity was moderate with 1,045 contracts traded as of 08:44 CDT.

Canola saw a moderate trade overnight with prices undermined by sharp losses in the e-cbot soybean complex and the plunge in global equity markets. Canola is expected to continue to see moderate declines as the North American trading session gets underway with the Chicago Board of Trade soy complex forecast to see big declines, traders said.

The weakness in the US soy complex will set the tone for the Canadian canola markets with the lack of any frost over the weekend also a bearish feature of the morning’s trade.
Crude oil markets are lower this morning and that will contribute to the slide as will bearish technical signals.

Some analysts are forecasting a drop back to the C$400 per metric ton level for the Nov canola contract as the outflow of speculative money will prompt the test of that price level. However, other analysts feel that with supplies of both soybeans in the US and canola in Canada as tight as they are the likelihood of a big price slide is limited.

Underpinning the canola markets and keeping it from seeing as large declines as the US soy market will be a very weak Canadian dollar and the slow pace to farmer selling.

Generally weather forecasts are calling for fairly favourable conditions for western Canada this week and that was negative. However, there is one dissenting voice as the closely watched forecast from Drew Lerner of World Weather Inc in Kansas City is calling for a heavy frost Thursday in Saskatchewan and possibly into Manitoba.

Commercials have dominated the overnight trade, but traders expect to see speculative liquidation selling in today’s trade.

Western barley is lower in light trade with the general weak tone in grains and slow demand weighing on values. Saturday’s announcement that the Canadian government will help farmers exit the hog industry was considered bearish as it will continue the falling demand for feed grains in western Canada, brokers said.

The total barley volumes at 08:42 CDT was estimated at 10 contracts.

Prices at 08:42 CDT in Canadian dollars per metric ton: