ICE Canola Recovers From Lows On Output Uncertainty

Crop uncertainty, however, kept a firm floor under canola and helped values recover from the lows seen early, market watchers said.

Overbought price sentiment and weakness overnight in overseas vegetable oil values helped to undermine canola, brokers said. Losses in global crude oil futures were also viewed as a bearish price influence.

The complete lack of fresh export demand, with China said to be out of the oilseed market, helped to spur some early selling in canola, traders said.

The losses were tempered by the absence of farmer deliveries into the cash pipeline as producers have locked up what available supply is left until more is known about the crop recently planted.

Cool temperatures, frost, dryness, and excessive moisture have set the western Canadian canola crop back significantly, and has reduced production potential.

Bruce Burnett, Director of the CWB’s Weather and Crop Surveillance Department in an industry briefing on Thursday estimated western Canadian canola output in 2009/10 (Aug/Jul) at 10.2 million metric tons, which would be down significantly from the 2008/09 level of 12.6 million.

An improvement in domestic crusher demand for canola also helped to limit the downside in futures, traders said.

The move by CBOT soybean futures off its lows for the day shortly after the open, also helped to erase some of the declines seen in canola, brokers said.

There were an estimated 8,023 canola contracts traded at 10:40 CDT. Of the contracts traded, 6,296 were spread related.

There were 28 western barley futures traded as of 10:40 CDT of which all was spread related.

The realigning of spreads was a feature of the activity in barley, brokers said.

Prices in Canadian dollars per metric ton at 10:40 am CDT: