ICE Canola Lower On C$, Slow Demand

Canola saw a moderate trade with intermonth spreading augmenting activity.

The total canola volume was estimated at 6,365 contracts, up from 6,748 contracts on Tuesday, including an estimated 2,008 contracts involved in the spread trade.

Canola was lower in the overnight session reflecting the weakness in Malaysian palm oil and losses in crude oil. Canola continued to see declines as the North American trading session got underway, despite a narrowly mixed opening in Chicago Board of Trade soy complex futures. Canola ended the session lower.

Canola was pressured down by the very strong Canadian dollar as the dollar traded above the significant US$0.91 level.
Also weighing on the market was sluggish demand as poor crush margins sidelined crusher buying while export interest also faded on the uncertainties surrounding crop size. The favourable crop growing conditions forecast through July and bearish technical signals contributed to the price slide. Technicians are looking for the Nov canola contract to test support at C$405.

The main support in the market came from the lack of farmer selling as cash bids are unattractive, say cash dealers. However they noted that new crop basis levels, as high as C$10/metric ton over futures in Alberta, did attract some interest.

Light exporter pricing was noted with Japanese buying also evident. The selling comprised of both speculative and commercial offerings with crushers noted sellers. Commission house selling was evident as was commodity fund liquidation selling. Funds were estimated to have sold 300 – 400 Nov contracts.

Western barley ended steady to a bit lower with no trades recorded.
End user bidding was C$2 – C$5/ ton below the market on expectations for ample feed grain supplies and reduced demand as livestock numbers are being culled by farmers due to the lack of profitability in the trade, brokers said.

Prices are in Canadian dollars per metric ton: