In The News - 07/06/2005
Malaysian crude palm oil futures ended up 1 percent on Monday, with the market returning to its key psychological support of 1,400 ringgit a tonne, after shadowing a rally in rival Chicago soyoil. But volume was light, with investors trying to get an idea of June's supply and demand before going long, dealers said.
"There's
quite a bit of concern on what production and exports
for this month could be, and that's holding the market from really
performing," said a trader. Two
independent surveyors of Malaysian oil palm cargoes, Intertek
Testing Services and Societe Generale de Surveillance, will release on Friday
export estimates for June 1 to 10 -- giving an idea of preliminary demand for
the month. The
goverment-run Malaysian Palm Oil Board will also issue on Friday
official production and export numbers for May, as well as opening stocks for
June.
Production was estimated to have grown by a modest 3 percent last month, against a 20 percent growth in exports. But investors are worried that demand could dip from June, leading to a build-up in stocks that weigh on prices.
The benchmark third-month crude palm oil on Bursa Malaysia Derivatives, August <KPOQ5>, closed up 14 ringgit, or 1 percent, at 1,405 ringgit ($369.74) a tonne. It broke the 1,400 ringgit support on June 1.
Monday's
high was 1,408 ringgit, while the low was 1,398.
Dealers
attributed the rebound to the rally in soyoil futures on
the Chicago Board of Trade (CBOT).
Soy
and palm compete for export destinations and their prices often
move in step.
In Monday's e-CBOT trade, July soyoil was up as much as 0.65 cent a lb, extending a rally that began on Friday on the back of weather concerns over the U.S. soybean crop.
But volume on the palm oil market was thin, with just 2,541 lots of 25 tonnes each traded. The market typically does 6,000 lots or more on a busy day.
Constant speculation that Malaysia will revalue its ringgit -- from the present fixed rate of 3.8 to the dollar -- was also weighing on investors' minds, dealers said.
Soybean
futures at the Chicago Board of Trade closed firm on Monday amid weather worries
but commercial selling, tied to South American hedge sales, trimmed the market
back from early strong gains, traders said.
Locals
also were featured sellers near the close and a lack of follow-through buying
from funds allowed the market to falter from the day's highs.
"Funds
didn't keep buying so that encouraged the bears and locals were able to push it
down," said Vic Lespinasse, floor spokesman for A.G. Edwards and Co.
CBOT
soy closed 7 cents per bushel higher to 1-1/2 lower. July <SN5> was up
2-1/2 at $6.77-3/4 per bushel. November <SX5> was up 6 at $6.86. A new
contract high of $7.01 was set in November in early dealings.
Volume
was estimated at 81,498 futures and 32,021 options.
CBOT
South American soy closed 3 to 15 cents higher with July <BSN5> up 3 at
$6.74. Volume in South American soybean futures was estimated at 7 contracts.
"Bunge
was selling late. There was some pretty good South American hedges in soybeans
and soymeal," a pit source said. Citigroup and Refco also sold soy near the
close while funds bought a total of 4,000 lots on Monday, traders said.
Drier-than-expected
weather over the weekend, especially in Illinois, and little relief in sight
from the dry spell boosted the market 2.5 percent to 2-1/2 month highs early in
the day.
The
South American hedge selling and weather jitters were the main fundamental
factors on the trading floor.
"There
are scattered showers around, not enough to provide much relief but just enough
to keep the buying at bay," said Don Roose, president of U.S. Commodities,
Des Moines, Iowa.
Dry
weather remains a concern in key crop areas of the eastern U.S. Midwest, a
private forecaster said Monday.
"There
wasn't much rain in central Illinois and southwest Indiana. There wasn't much
rain in areas that it was needed," said Meteorlogix forecaster Joel Burgio.
Dry
weather has been slowing growth and development of the corn and soybean crops in
the eastern Midwest and there is no relief in sight from the crop-stressing
weather.
"It
will be mostly dry through Wednesday, only scattered showers in the east,"
Burgio said. "It's also dry and hot in the Delta which mainly concerns
soybeans."
After
the markets closed, USDA said 62 percent of the U.S. soybean crop was rated in
good to excellent condition. That compares to last year's 65 percent
good-to-excellent rating.
Exports
were quiet over the weekend and cash basis bids for soy in the Midwest on Monday
were firm at river locations and steady in the interior. Farmer selling was
slow, cash merchandisers said.
Friday's
CFTC commitments of traders report showed that large speculators further boosted
their net long position in CBOT soybean futures to a more than 2-to-1 long
stance during the week ended May 31.
Technical
support in the July contract was at $6.70-1/2 and resistance at $6.80-1/2 was
broken, touching off buy-stops and driving the contract to a session high of
$6.95-1/2 per bushel.
Soymeal
futures closed unchanged to $3.30 per ton higher following the gains in soy.
July was unchanged at $215.20 per ton.
Funds
bought about 2,000 soymeal contracts, traders said.
Soymeal
volume was estimated at 27,440 futures and 3,282 options.
Friday's
CFTC commitments of traders report showed that large speculators boosted their
net long stance in CBOT soymeal futures to a nearly 3-to-1 stance in the week
ended May 31.
Soyoil
futures closed 0.05 to 0.21 cent per lb higher with soyoil also taking its cue
from soy amid the weather concerns in the eastern U.S. Midwest. July was up 0.21
at 23.16 cents per lb.
Funds
bought 2,000 soyoil contracts, pit sources said.
Soyoil
volume was estimated at 22,795 futures and 1,080 options.
Malaysian
palm oil futures closed higher overnight. Traders in Kuala Lumpur said palm
rallied in step with strong gains in CBOT soyoil.
Friday's
CFTC commitments of traders report showed that large speculators expanded their
net long position in CBOT soyoil futures in the week ended May 31.
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