ICE Canola Lower On Favourable Crop, Weak Soyoil

Canola saw a moderate trade with an estimated 8,310 contracts traded by 11:20 CDT with intermonth spreading enhancing the activity.

Canola was pressured down by the favourable weather forecast for western Canada this week and the soft tone in Chicago Board of Trade soyoil futures. The scale down nature of the commercial demand contributed to the weakness with bearish technical signals prompting some speculative selling, traders said.

Traders are watching to see if the Nov contract will be able to hold support at the C$400 per metric ton level.
If the level does not hold, they feel that another substantial "leg down" may occur in the canola market.

The main support in the market is coming from the lack of farmer selling. However firm cash basis levels in the new crop have attracted some interest, cash dealers said. "New crop cash basis are as much as $40/ton above traditional levels and that has attracted some interest", they said.

Demand has been fairly routine with both exporters and crushers in the market. The selling has been a combination of commercial and speculative. The speculative selling comprises of fresh shorting of the market and continued liquidation of Nov longs. The commercial selling includes some European hedge selling as harvesting continues in western Europe and the Ukraine, traders said.

Western barley was untraded and unchanged with end user bids well under the market as demand is being subdued by the import of "cheap" US dried distilled grains, an ethanol by product, said brokers.

Prices at 11:29 CDT in Canadian dollars per metric ton: