Canola Futures Decline Amid Large Supplies and Weak Demand

Canola futures at the Winnipeg Commodity Exchange (WCE) were trading at mainly lower levels at midsession, with declines attributed to large supplies and only limited demand. Market watchers noted that position evening ahead of Wednesday's updated crop production survey was a notable feature of the activity. The losses in canola were tempered by scale-down domestic crusher demand and light exporter pricing of old business with Japan.

Key Takeaways:

• Canola futures at the WCE were trading at mainly lower levels at midsession, with declines associated with large supplies and only limited demand.
• Western barley and feed wheat futures were narrowly mixed, with some support from minor end-user demand and the absence of producer offerings to the country elevator system.
• An estimated 9,313 canola contracts had changed hands at midsession, with the January/March contracts spreading at C$6.70 to C$7.40 per metric ton.
• The losses in canola were tempered by scale-down domestic crusher demand and light exporter pricing of old business with Japan.
• Pre-report estimates had pegged Canada's 2005/06 canola production at 8.60 million to 9.20 million metric tons, which would compare with the 2004/05 level of 7.728 million.
• The Canadian currency had touched new 14-year highs in early Tuesday morning activity, adding to the bearish sentiment in the canola pit.
• Traders noted that the funds had sold another 1,000 contracts that morning, easily, adding to their already large short position.

Statistics:

• 9,313 canola contracts changed hands at midsession.
• Canola futures were trading at a lower level at midsession, with new contract lows established in the nearby months.
• Declines in CBOT soybean and soyoil futures augmented the downward price slide in canola.
• The sell-off in both CBOT corn and wheat futures tempered the upside in the feed complex.
• An estimated 50 feed wheat contracts had changed hands at midsession, while 141 western barley contracts had traded.

Sources:

• Resource News International via COMTEX