ICE Canola Follows US Soy Down

Canola activity was moderate with intermonth spreading significantly enhancing the volumes.

The total canola volume was estimated at 9,020 contracts, down from 16,168 on Tuesday.

Canola was lower in the overnight trade with losses prompted by declines in e- cbot soybean futures and ideas that Tuesday’s gains were overdone. Canola was lower as the North American trading session got under and the CBOT soybean market opened lower. Canola ended the session with losses.

Canola closely followed the downward gyrations in the CBOT soybean futures market on Wednesday with the favourable weather in western Canada through the weekend also weighing on the market. Profit taking after Tuesday’s rally, the advancing harvest and increased farmer selling weighed on the markets. The firm Canadian dollar and sluggish fresh export demand contributed to the slide. Bearish technical signals also pressured the market down.

Underpinning the market were the continued forecasts for frost late next week in western Canada and ideas that canola is undervalued after its recent drop, traders said. "Frost is still a threat to the (canola) crop, but if frost does appear next week a lot more crop has made it than was originally expected to", said a cash dealer.

Japanese pricing was augmented by some light crusher buying.
Commission house short covering was also evident as nervous speculators were covering positions, said brokers. The selling was mainly commercial with elevator company hedge selling moderate. Commodity fund short selling was noted with traders estimating their selling at 500 Nov contracts.

Western barley ended mixed with the Oct contract higher and the Nov contract lower in light trade. The Oct contract was dominated by liquidation trade.
The Nov contract was undermined by the weak tone in CBOT corn, lackluster demand and the advancing harvest, brokers said.

The total barley volume was estimated at 85 contracts, down from 227 contracts on Tuesday.

Prices are in Canadian dollars per metric ton: