ICE Canola Lower On Big US Soy Losses

Canola saw an active trade that was comprised mainly of intermonth spreading as commodity funds and exporters were rolling positions from the July contract to the Nov contract.

The total canola volume was estimated at 17,239 contracts, down from Tuesday’s 21,646 contracts, including an estimated 10,708 contracts involved in the spread trade.

Canola was lower in the overnight session, prompted by weakness in international vegetable oil prices and losses in crude oil. Canola extended its losses as the North American trading session got underway and the CBOT soy complex posted unexpectedly large declines, traders said. However, canola came back from its lows and outperformed the US soy complex, ending the day only modestly lower in the most actively traded contracts.

Canola was pressured down by the steep declines in CBOT soy complex futures, weakening crush margins, the lack of fresh export demand and ideas canola is overbought and due for a correction lower.

However, losses were much smaller than the US soy complex as sharp declines in the Canadian dollar, and continued weather concerns supported the market.
Record cold temperatures in western Canada this week, with more forecast through the weekend, limited the price slide. Analysts did note that the late planting of the canola crop did make it less vulnerable to the cold conditions.

Routine exporter and crusher buying met commercial and speculative selling. Commission house profit taking was noted as was exporter liquidation selling. Farmer selling was described as steady as cash dealers noted that cash bids of C$10.50/bu in Alberta are attracting supplies out of producers’ hands.

Western barley rallied in light commercial trade.
The lack of farmer selling and the cold conditions accounted for the gains in the face of the big drop in US corn prices, brokers said. They did note that the barley market continues to be plagued by a lack of commercial participation as participants are sidelined waiting to see the revised barley contract that the exchange is preparing.

The total barley volume was estimated at 129 contracts, down from 559 contracts on Tuesday, including an estimated 118 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: