ICE Canola Futures Drop On Dubai Concerns

World equity markets were sharply lower overnight, partly due to nervousness about the financial condition of Dubai World, the government owned corporation that holds vast real estate assets in the US and UK. Dubai World, has asked creditors to defer payments on a US $60-billion loan for six months.

Declines overnight in e-CBOT soybean futures helped to stimulate some of the price declines in canola as did the lower calls for CBOT soybean and soyoil values with the start of the North American day session.

Activity at the CBOT will be abbreviated Friday.

Contributing to the weakness in canola will be the continued uncertainty regarding Canada’s ability to export the commodity to China. Problems in shipping Canadian canola meal to the US due to salmonella contamination issues was also seen as bearish.

News that locomotive engineers could begin a strike against CN Rail as early as Saturday also weighed on the market as it called into question Canada’s ability to be a reliable supplier of canola, brokers said.

The inability of values to push through major technical resistance in the January contract in the
C$410 to C$412 per metric ton area also was viewed as an undermining price influence.

Market participants were also anticipating additional speculative fund long liquidation orders to surface during Friday’s session, analysts said.

Providing some light support for canola was the steep decline in the value of the Canadian dollar and the sluggish pace to farmer selling.

As of 9:41 am EST, there were 1,722 canola contracts traded.

As of 9:41 am EST, no western barley contracts had been traded.

Some minor psychological support in western barley may come from the Canadian Wheat Board’s price outlook update that was released Thursday afternoon for feed barley, brokers said.

The CWB raised feed barley PROs by C$7 per metric ton from its October forecast.