ICE Canola Falls With US Soy

Canola saw a moderate trade with intermonth spreading augmenting activity. Month-end positioning was noted.

The total canola volume was estimated at 11,770 contracts. up from Friday’s 8,465 contracts, including an estimated 4,022 contracts involved in the spread trade.

Canola was lower in the overnight market as the plunge in global stock markets, lower crude oil and weaker vegetable oil prices weighed on the canola market accounting for moderate declines. Canola maintained its weak tone as the North American trading session got underway and the CBOT soy complex dropped sharply. Canola traded lower all session ending lower.

Canola was mainly pressured down by the weakness in CBOT soy complex and the plunge in the Chinese stock market which prompted concerns about whether China would be a strong buyer of canola this year. Also weighing on the market was the reduced frost threat.
Forecasters say there is little frost threat in western Canada through the middle of next week. Sluggish fresh demand contributed to the selling pressure.

Canola losses were smaller than the US market as a steep decline in the Canadian dollar gave some support. Slow farmer selling also gave support with canola stocks being held by commercials also very tight. The Canadian Grain Commission reported that canola supplies in commercial hands as of last week were 462,000 metric tons, compared to 713,000 tons at the same time last year.

Routine exporter and crusher buying met commercial and speculative selling. There was also some month end farmer pricing of delivery contracts noted, said cash dealers.

Western barley posted losses in moderate trade. The Oct contract was pressured down by continued liquidation selling by a US commodity index fund who announced that it would exit the barley market by the end of August because of the poor liquidity. The aggressiveness of their selling sent Oct to its lows at the close.

The Nov contract was undermined by a drop of about C$10/ton in barley cash prices in southern Alberta in the past week.

End user buying met commercial and fund selling.

The total barley volume was estimated at 1,089 contracts, down from 1,172 contracts on Friday, including an estimated 924 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: