ICE Canola Moves Lower On Profit-Taking, Outside Losses

After pushing sharply higher Monday, canola lost ground overnight on profit-taking and the retreat seen in outside markets. E-CBOT soybeans, stock markets and crude oil futures also posted overnight losses following big rallies yesterday.

Ideas that Monday’s rally in canola had been overdone added to the downward price action.

With Chicago soybeans called lower at the start of North American trade and equities and crude oil posting losses, canola contracts may continue to struggle as the trading day progresses, traders said.

The strength of the Canadian dollar, which was trading above 92 US cents in early activity, will weigh on canola values as well, they said.

However, weather-related concerns are very supportive for canola prices and will provide a floor for the market, analysts said. There are concerns about significant dryness in the western prairie region while in other regions frost this week could threaten newly emerged canola crops.

Traders said parts of Saskatchewan saw temperatures dip as low as minus 4 degrees Celsius overnight and further cold weather is forecast in the coming days.

Canola contracts would also likely follow suit if the lower US dollar index propels US grains and oilseeds higher, as was the case on Monday, a market analyst said.

Early trade volumes in the canola market were heavier than normal, with 4,156 contracts traded as of 9:03 CDT. Much of the volume was tied to inter-month spreading.

Meanwhile, in the western barley market contract prices were higher although interest was very light. Only 5 contracts had changed hands as of 9:03 CDT.

Prices in Canadian dollars per metric ton at 9:03 CDT: