US Canola Down On US Soy Plunge

Canola saw a moderate trade with intermonth spreading augmenting activity.

The total canola volume was estimated at 9,756 contracts, down from Thursday’s 12,502 contracts, including an estimated 4,048 contracts involved in the spread trade.

Canola posted losses in the overnight session, prompted by declines in international vegetable oil values. Canola maintained the overnight losses as the North American trading session opened and the CBOT soy complex dropped moderately, traders said. Canola ended the day lower.

Canola was mainly pressured down by the weak tone in the CBOT soy complex and the steep losses in crude oil, said traders. Contributing to the weakness was increased farmer selling, mainly out of Manitoba and Saskatchewan, as weather conditions in those provinces are encouraging, said cash dealers. Bearish technical signals, following Thursday’s poor market performance, and the unaggresive nature of the buying contributed to the losses.

Underpinning the market was continued concerns about weather as frost was reported in the Peace River region of Alberta. Traders indicated that it did no significant damage. Weather forecasts call for single digit lows in Alberta on the weekend with talk of frost in the Edmonton area and that gave some support.

Continued steady commercial buying also supported values. "Nov open interest has gone up every day for month, except for some liquidation on July 31st," said a trader.
"Some one wants to own canola and I don’t think you would want to be short with the crop problems," he added.

A steep slide in the Canadian dollar also helped to limit the negative impact of the falling US soy market.

Routine exporter buying was augmented by speculative buying, thought to be for commodity funds, said traders. The selling came from exporters and elevator companies.

Western barley posted losses in light activity as expectations for adequate "cheap" feed supplies in western Canada despite a small barley crop weighed on values, brokers said.

The total barley volume was estimated at 50 contracts, down from 88 contracts on Thursday, including an estimated 50 contracts involved in the spread trade.

Prices are in Canadian dollars per metric ton: