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ICE Canola Lower On Weak Outside Markets

| 2 min read

By Don Bousquet

By Don Bousquet, Resource News International

Dec 14, 2009

Winnipeg – Grain and Oilseed futures contracts traded on ICE Futures Canada are lower at 08:30 CT Monday with canola pressured down by weakness in outside markets, traders said.

Canola activity was very light and traders feel that the market may be entering the seasonal Xmas slow down, although some traders noted that open interest suggests there will still be some heavier volume sessions. The total canola volume as of 08:30 CT was 471 contracts.

Canola was lower for the bulk of the overnight session in small activity as weakness in outside markets and lower international vegetable oil prices weighed on values. However a choppier tone did develop as the Canadian dollar weakened against the US dollar.

Canola is expected to continued to see modest declines as the North American trading session gets underway and the Chicago Board of Trade soy complex opens a bit lower. The US market was pressured down by reports out of China that the Beijing government will release supplies from their soybean and soyoil reserves in order to drive down prices.

However, US traders note that there are underlying pressures that are supportive for the market and they feel that choppiness may be the order of the day as the weak US dollar, a firming tone in crude oil from small losses
and continued strong demand are expected to support soybean values. Traders noted a very strong crush pace in the US in November as also helping to lift the market.

Canola traders feel if the US market does rally, canola will follow it as the weak Canadian dollar and slow farmer selling are supportive. They also noted that demand is strong in both the export and the domestic market.

Technically, canola remains in a tight trading range and traders do caution that a significant break out, either way, could set the tone for the market.

Western barley was unchanged overnight amid lack of trade. The market is expected to be under pressure from
slack end user demand amid a lack of news. The continuing decline in open interest was also viewed as a negative feature of the trade.

Prices at 08:45 CT in Canadian dollars per metric ton:

    Price Change
Canola
  Jan 409.70 dn 2.50
  Mar 416.40 dn 2.80
  May 422.20 dn 3.50
 
Western Barley
  Jan 159.00 unch
  Mar 160.00 unch