ICE Canola Lower, Demand vs Soaring Loonie

Canola saw a moderate trade with intermonth spreading contributing to the activity.

The total canola volume was estimated at 9,932 contracts, down from Tuesday’s 12,570 contracts, including an estimated 2,538 contracts involved in the spread trade.

Canola was lower in the overnight trade, reflecting weakness in Malaysian palm oil and on ideas that Tuesday’s gains were overdone. Canola continue to see losses as the North American trading session began.
Canola saw a very choppy trading session bouncing between gains and losses several times during the day with prices ending modestly lower.

Weighing on canola were ideas that canola’s gains on Tuesday were overdone, the very strong Canadian dollar and
favourable growing conditions in Manitoba and Saskatchewan. Farmer selling picked up as cash bids climbed above C$10.00/bu once again. However cash dealers said the farmer selling was still overall light.

Canola was supported by the strong commercial demand with the strong export lineup for Sept-Oct giving support. As well, traders noted that the crush pace this fall is also expected to be very high, and will likely be higher than last year’s level. Also supportive was the firm tone in the Chicago Board of Trade soyoil market, gains in crude oil and very friendly technical signals. Significant problems with the Alberta canola crop also helped to underpin the market.

The relatively evenly balanced bullish and bearish influences resulted in the choppy trade.

Exporter and crusher demand was augmented by speculative buying. The selling comprised of profit taking by commission houses, commercial offerings and steady but light elevator company selling, brokers said.

Western barley ended higher. The Oct contract continued to see liquidation activity.
The Nov contract moved higher as the lack of farmer selling forced some small end user pricing to lift the market, brokers said.

The barley volume was estimated at 207 contracts, down from 360 contracts on Tuesday, including an estimated 182 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: