ICE Canola Lower On Weak Vegoils, Outside Markets

Canola saw an improved trading volume overnight with mainly commercial participation, said brokers. As of 08:42 CDT an estimated 521 contracts had traded.

Canola was pressured down overnight by weakness in Malaysian palm oil markets and the weak tone in outside markets, including crude oil.
Canola is expected to maintain small declines at the North American trading session opening despite expectations for a flat to higher Chicago Board of Trade soybean market, said traders.

Contributing to the expected weakness was the firm Canadian dollar and the generally favourable growing conditions across western Canada. Demand remains lacklustre and that was also a bearish influence on the market, analysts said. The declines in the outside markets, including equities, crude oil and precious metals, will also weigh on canola prices.

Traders are also not convinced that the CBOT soy complex will be able to hold onto to any early strength.
"Everything says this market (CBOT soybeans) should be lower today and that is the way I think it will head after the opening," said a broker. Any further declines in soybeans will add bearish pressure to the canola market.

The main support in canola comes from the lack of farmer selling despite firm basis levels in the new crop.
Old crop bids are in the C$9.00/bushel area and cash dealers indicate farmers consider this unattractive. Lingering crop uncertainty is mildly supportive, but is mainly limiting trading activity, say traders.

Technically, the canola market is holding at significant support levels, although technicians feel the trend is lower as they say it is possible to see a test of the significant support at C$400 in the Nov contract.

Western barley is expected to continue to work lower with the sluggish demand and ample feed grain stocks weighing on the market. Traders are also talking about the potential for drought to downgrade grain supplies to feed quality levels as a bearish factor hanging over the market.

So far no barley has traded with bids well under the current prices, said traders.

Prices at 08:41 CDT in Canadian dollars per metric ton: