ICE Canola Futures Ease on Poor Demand, Strong C$

Some position evening ahead of Thursday’s updated crop production report from Statistics Canada was anticipated.

The Dubai’s debt scare which dominated the global financial headlines late last week remains a feature for markets overall, but the "sky is falling" mentality has eased considerably, brokers said.

Weakness in canola was also being linked to the fact that Canada’s canola trade with China remains stalled with excess product sitting at terminal positions now with no destination, analysts said. There were reports of an industry briefing on Friday but confirmation from the Canola Council of Canada was not available.

Adding to the bearish sentiment in canola was the labour dispute between Canadian National Railway and its 1,700 locomotive engineers.

The engineers went on strike on Saturday after CN was said to have initiated a "lock-out" by changing terms of the previous collective agreement.

Movement of all freight on CN rail lines, including grains and oilseeds, was expected to be slowed or halted by the work stoppage, analysts said.

There were reports that Canada’s federal government has back to work legislation ready which would end the dispute, and which may be introduced as early as Monday, brokers said.

The strike was seen as bearish for canola futures, with domestic processors and exporters both having difficulties moving product.

Overhead technical resistance, particularly in the January contract, was also viewed as an undermining price influence.

Some underlying support in canola was linked to the gains seen in e-CBOT soybean values overnight and the higher calls for CBOT soybean futures with the start of the North American day session, traders said.

The reluctance of producers to deliver to the country elevator system was helping to generate some minor support.

As of 9:42 am EST, there were 506 canola contracts traded.

As of 9:42 am EST, no western barley contracts had been traded.