ICE Canola Lower In Dull Trade

Canola activity was very thin which is expected to continue throughout today’s session with the normally dominant Chicago Board of Trade soybean market closed for the US Independence Day weekend. The total volume as of 08:30 CDT was only 26 contracts.

Canola was pressured lower overnight by the general bearish tone that has invaded markets following the recent bearish news in the outside markets that US and European unemployment was at higher levels than expected. Weakness in Malaysian palm oil contributed to the decline.

Canola is expected to continue to see modest to moderate declines throughout the Friday session in extremely light activity. Weighing on the market will be showers moving through some of the driest areas of Alberta and Saskatchewan. Traders indicate that, at best, the showers will only stave off the dryness problems for another day and will not eliminate the drought.

Also weighing on the canola market will be the firm tone in the Canadian dollar and recent decline in crude oil. Technically, traders say the market does seem to be attempting to stabilize in the $450-$465 price range, but they do not preclude a further bearish push to the market. :

Giving support will be the continued drought in western Canada and the smaller canola crop. Recent reports from Alberta say that much of the crop is past being able to comeback to reasonable yields and that rain now will have only a modest positive impact on production.
Private agencies are estimating that the drought will lower the average canola yield in Canada by at least 10% from normal.

However, traders agree that in the small volumes expected today, price movement will not necessarily be significant.
"You’re able to move this market on a 5 (contract) lot, buy or sell, so I am not sure any price movement will really tell you anything," said a trader.

Farmer selling remains muted by the crop uncertainties.
Fund participation is also expected to be lacking today.

Western barley is a bit lower in light trade as liquidation of the July and Oct contracts will weigh on the market as participants attempt to exit these contracts that are being replaced by revised contracts that are deliverable in southern Alberta, the sight of Canada’s main cattle feeding industry. The recent declines in CBOT corn will also weighed on the market today.

Overnight there was no trade in the barley contracts with some early activity appearing in Oct barley with 3 contracts traded by 08:48 CDT

Prices at 08:48 CDT in Canadian dollars per metric ton: