ICE: Canola pulled down by weaker outside markets

Alana Vannahme, Resource News International

Winnipeg, March 27 — Canola futures on the ICE Canada platform were lower as of 11:05 CDT on Friday as the bearish tone in outside markets spilled over into canola.

Helping to encourage the mainly-commercial selling were losses in CBOT soyoil and soybean futures, weakness in equity markets as well as significant declines in the value of crude oil futures, market watchers said.

Adding to the downward pressure was the soft tone prompted by overnight losses in vegetable oil markets.

Canola was also being weighed down by ideas that high fertilizer costs and wet, cool weather will encourage high U.S. soybean acres for 2009-10. Market participants are waiting for Tuesday’s (March 31) release of the key U.S. Department of Agriculture prospective planting report.

Reports that the Chinese government is planning to release part of its soybean stocks into the domestic market was a bearish price influence as well, market observers said. Traders fear such a move will reduce demand for North American oilseeds.

That said, canola contracts were holding up well given the downward pull from outside markets. Brokers said a recent drop in canola’s product value was encouraging enough buying interest to stem the market’s losses.

"The market environment is quite weak so canola will probably drift lower with the other markets but its losses should be fairly moderate," said a Winnipeg trader.

Limited support was also tied to the uncertainty caused by the farmers strike in Argentina over the government’s controversial 35% soybean export tax, brokers said. The strike is supposed to end today but so far there has been no news about whether that will still happen. More talks between the parties are reportedly scheduled for Monday.

As of 11:05 CDT, 5,672 contracts had been traded, of which 3,642 were tied to spreading.

Western barley futures were unchanged. There was little interest in the market on Friday, with only 34 contracts having been traded as of 11:05 CDT.

Prices in Canadian dollars per metric ton at 11:05 CDT:

          Price    Change
Canola
     May     418.00    dn 3.10
     Jul     421.90    dn 3.60
     Nov     426.90    dn 2.70
 
Western Barley
     May     152.50    unch
     Jul     159.80    unch