ICE Canola Mixed, Watching US Soybeans

Canola saw a light trade with an estimated 553 contracts traded as of 09:54 EDT.
Activity is expected to be thin ahead of the Wednesday’s US Department of Agriculture supply-demand reports, which traders are calling the most significant reports of the year.
They note that it often contains "surprises".

Canola dropped hard during the overnight trade as the US soybean market fell. However as the soybean market climbed back, canola moved higher with it and is mixed ahead of the opening of the North American trading session.

Traders are looking for canola to follow the soybean and soy complex market higher and feel the overall bias in canola is modestly higher Monday morning. A weak Canadian dollar, slow farmer selling and the continued frost threat will continue to support values. Chicago Board of Trade soybean markets are expected to firm when North American trading gets underway and that is also expected to help lift the canola market.

Weather forecasters are calling for a significant warm-up in Saskatchewan and Manitoba this week, but Alberta is expected to continue to be cool with lows in the single digits.

"Frost is not far from anyone’s thoughts in these markets", said a trader.

Weighing on the market is the sluggish export outlook and technical signals that suggest the market still needs to fill gaps in the C$418-$420 level.

The reports that the Food and Drug Administration in the US has held some more canola meal exports into the US because of salmonella contamination was largely thought to be minor.
Traders pointed out it had almost no impact last time it happened and they don’t foresee a problem this time. "The problem cargo (from a Viterra crusher in St Agathe, Manitoba)
happened in the middle of July and it has had almost no market impact," said a broker.

Commercials have dominated the early trade and are expected to be the main participants ahead of the Wednesday USDA reports.

Western barley is unchanged and untraded. The market is expected to be lower in the wake of losses in CBOT corn. Sluggish demand will contribute to the weaker tone as will the bearish technical signals.

However, cash bids are a bit higher than Nov futures and that will limit declines. Traders also indicate that there is the possibility of strength in the Oct contract on the need to liquidate positions.

Prices at 09:51 EDT in Canadian dollars per metric ton: