December 1, 2009

ICE canola weaker as bearish price influences add up

Canola contracts traded on the ICE Canada platform were lower at 11:58 a.m. EST Monday (November 30), as the bearish news in the market outweighed any support coming from the firmer tone in CBOT soy.

"Canola just can't seem to catch a break," said a canola broker. He said the strike by Canadian National Railway engineers over the weekend added to the already bearish canola market, making it difficult for both exporters and domestic processors to move the commodity. While market participants were hopeful that government back-to- work legislation would end the strike quickly, any delays in movement now could lead to larger canola supplies going forward.

In addition, traders anticipate an upward revision to Statistics Canada's canola production estimate when the government agency releases its latest report on Thursday. The broker noted that average trade guesses were for an 11.0 million- tonnes crop, which would be well above the 10.269 million tonnes forecast by Statistics Canada in October.

While speculative buying did help canola move higher earlier in the session, the market was unable to hold above the C$411 (US$389.64) per tonne level in the January contract. The broker said there was "a wall of farmer selling above the market," which was limiting any advances.

The Canadian dollar was stronger on Monday, adding to the weaker tone in canola, said traders.

Light exporter and domestic crusher pricing provided some support, limiting the downside. The firmer tone in CBOT soy also provided some spillover support for canola, according to the broker.

At 11:58 a.m. EST, about 7,900 canola contracts had changed hands, with the January/March spread a minor feature of the activity.