ICE Canola Lower On Strong Loonie

Canola saw a light trade with some intermonth spreading activity evident. Canola volumes were estimated at 940 contracts.

Canola ignored the firm tone in international vegetable oil markets and the overnight strength in eCBOT soy complex trade and reacted more to the Canadian dollar rally as the weakness in the US dollar caused as much as a 150 point rally in the Canadian currency.

However, traders were not willing to predict that canola would stay lower as they indicated that the US soy complex was expected to see a bigger advance when the CBOT opens on the steep slide in the US dollar.
Also supportive for canola are the crop uncertainties.

One analyst noted that virtually all the prairie canola crop has been touched by frost in recent weeks and that the potential for an above average crop is virtually gone with the possibility of getting an average crop also a "big question mark".

Analysts feel that canola has been focussing on the firming Canadian dollar and the sluggish fresh exports with both exporters and crushers lacklustre buyers. However, they did point to the current poor growing conditions causing farmers to shut their bins, until they are confident of getting a crop this year as giving some support.

As a result traders feel that canola will likely firm after the opening, although they were unwilling to speculate how strong the market would be, once it turns higher.

"The commercials are still in charge (of this market) and they are taking a wait-and-see attitude", said one broker, "until we see the spec money come in the firming will be tentative".

Western barley futures are expected to be little changed as the market continues to be plagued by low interest.
Barley futures were unchanged as of 08:50 CT with no trade noted.

With the recently announced revisions to the barley contract, most participants are content to sit on the sidelines and use alternative market strategies, said brokers.

Prices at 08:50 CT in Canadian dollars per metric ton: