ICE Canola Lower, Watching The Loonie

Canola saw a light trade overnight as an estimated 534 contracts had traded by 08:39 CDT.

Canola was lower in the overnight session ignoring a mixed choppy tone in international vegetable oil and oilseed markets. Traders said the bearish market momentum and the firm Canadian dollar continued to weigh on the market. Thin commercial interest accounted for the bulk of activity.

Canola is expected to continue to see losses as the North American trading session gets underway with the Chicago Board of Trade soybean market expected to post small declines in a consolidation trade.

Canola’s losses will be determined by the Canadian dollar, said traders who note that the dollar is pressing against significant resistance at the US$0.9250 level.
Brokers expect to see funds attempt to take the dollar above this level in order to stimulate fresh demand and move the dollar significantly higher.
"If the (Canadian) dollar convincingly breaks 0.9250 then canola will continue to erode and may even eventually test support at C$400/metric ton", said a trader.

Beside the firm dollar, favourable growing conditions are weighing on the market with this week’s provincial crop reports all noting improvement in the canola crop, analysts said.

Demand continues to be lacklustre with poorer crush margins limiting crusher interest and exporters only buying to cover some routine sales to Mexico and Japan.

Giving support is the continued lack of farmer selling as producers are disappointed with cash prices just a bit above the C$9.00/bu level in most of western Canada. Traders do feel canola is "very oversold" and due for a correction higher.

Western barley is unchanged and untraded with bids and offers quite far apart.
There was little fresh news driving the market. Weakness in the cash market has traders expecting to see further losses in barley.

Prices at 08:38 CDT in Canadian dollars per metric ton: