ICE Canola Lower On US Soy Plunge

Canola saw an active trade with the bulk of the volume comprised of intermonth spreading as commercials were rolling Jan contracts into Mar ahead of month end when Jan becomes the cash month.

The total canola volume was estimated at 22,972 contacts, up from Wednesday’s 14,527 contracts, including an estimated 15,890 contracts involved in the spread trade.

Canola was lower in the overnight market on weakness in outside markets and lower international vegetable oil prices. Canola maintained small losses as the North American trading session opened despite a big slide down in CBOT soy complex prices. Canola ended with losses, although they were much smaller than the US soy complex slide, brokers said.

Canola was mainly undermined by the weakness in the US soy complex and losses in outside markets, said traders. Providing only minor bearish input was the large canola supply and uncertainty about exports to China, said analysts.

The trade has mixed attitude toward China’s embargo against the purchase of Canadian canola due to Blackleg infestation. Traders note that export movement through the west coast between now and Jan 10th is 400,000 metric tons, which one exporter described as "pretty good, particularly without China".

On top of that other traders noted that canola open interest has climbed back to 106,721 contracts, very close to the level of 107,277 contracts prior to the Chinese decision. Liquidation on the news of the Chinese canola embargo had pushed canola open interest to 86,000 contracts within a week,. "Someone wants these supplies", was the way one trader put it.

Giving some support was the lack of farmer selling, sharp declines in the Canadian dollar and steady export demand in the small pre-holiday volumes, brokers noted.

Exporters, crushers and speculators provided the buying while the selling came from commercials with speculative selling noted.

Western barley ended unchanged in light commercial trade. The market drew support from the lack of farmer selling amid a lack of interest in the market, brokers said.

The total barley volume was estimated at 43 contracts, up from 20 contracts on Wednesday, including an estimated 10 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: