In The News - 08/06/2005

Malaysian crude palm oil futures ended below the key 1,400 ringgit level on Tuesday after an influential trading house with large refineries in Indonesia sold down olein on the physical market.

A softening of rival Chicago soyoil in Tuesday's electronic trade -- after Monday's higher close -- deepenned the fall.

The trading group with interests in Indonesia sold RBD palm olein for July through December in the physical market at $395 a tonne, versus Monday's close of $402.50, dealers said. 

"Everybody suspects that they sold down on the futures market as well," said one dealer.

August settled down 16 ringgit, or 1.34 percent, at 1,389 ringgit ($365.52).

The contract had closed above the psychologically important 1,400 ringgit level on Monday for the first time in a week. But it broke that support in Tuesday's early session.

 The low for the day was 1,388 ringgit while the high was 1,404.

Volume was thin, with just 2,998 lots of 25 tonnes each traded. The market typically does 6,000 lots or more on a busy

day.

Soyoil futures on the Chicago Board of Trade declined in Tuesday's electronic trade, with July down 0.01 cent a lb.

Soybean futures at the Chicago Board of Trade closed lower on Tuesday with the July contract pressured by speculators rolling their long positions before the start of the delivery period at month's end, traders said.

"The feature was the spread trade, getting out of the July positions ... and weakened the nearby spread," said Dan Cekander, an analyst with Fimat Futures.

Refco, Iowa Grain, Fimat Futures, and ADM Investor Services were among the bear spreaders.

July soybeans closed 3 cents per bushel lower at $6.74-3/4, with the nearby spread weakening 1/2 cent. New-crop November settled 1/2 cent lower at $6.85-1/2 -- nearly an 11-cent premium to July -- underpinned by crop jitters amid changing forecasts for rains in the dry U.S. Midwest.

That uncertainty rallied prices early and added to the day's volatility, traders said. That volatility should keep traders edgy through the growing season, especially with the increasing trade interest by commodity funds in agricultural markets.

"The next three months are the most difficult months for weather forecasting agencies to try and nail down forecasts," said Joe Victor, an analyst with Allendale Inc., an agricultural consulting firm.

Meteorlogix weather on Tuesday reported mainly favorable conditions for developing crops in the west and northern part of the Midwest. It was still very dry in much of Illinois and Indiana, but those areas may see thundershower activity later this week.

"There will be a few showers through Thursday in the south and north but not a lot in the dry central areas of the eastern Midwest," said Meteorlogix forecaster Joel Burgio. "There will be more showers Friday and Saturday in the eastern corn belt of around 0.10 to 0.50 inch."

The U.S. Department of Agriculture on Monday said 62 percent of the U.S. soy crop was in good to excellent condition. That was in line with trade expectations and below the 65 percent good to excellent rating of a year ago.

U.S. soybean basis bids were steady at interior locations in the Midwest early Tuesday but weaker at river terminals, reflecting weaker CIF soy values at the U.S. Gulf, dealers said. Farmer sales were quiet early Tuesday after a pickup in movement on Monday tied to the CBOT rally.

South American soybean futures settled 7 cents lower to 3-1/2 cents higher. The July contract did not trade. Volume was estimated at five lots.

The soy product markets were pressured by the weakness in soybeans. But soyoil futures outperformed soymeal amid oil/meal spreading as that spread corrected after CBOT soymeal reached a one-year top on Monday.

U.S. cash soymeal markets had a softer tone after crushers saw more soybeans move into their plants on Monday when the CBOT rallied. But seasonal downtime underpinned the cash market, keeping it from breaking, traders said.

CBOT July soymeal <SMN5> closed $1 lower at $214.20 per ton, with the deferreds 40 cents to $1.60 per ton weaker.

July soyoil <BON5> closed 0.10 cent per lb weaker at 23.06 cents, with the deferreds down 0.09 to up 0.08 cent.

Malaysian palm oil futures closed lower overnight. Palm sagged after an influential trading house with large refineries in Indonesia sold down olein on the physical market, traders in Kuala Lumpur said.

Export business featured Iran buying 15,500 tonnes of Malaysian palm olein in a tender issued on Monday.

Volume was moderate across the complex. In soybeans, an estimated 72,713 futures and 26,098 options traded. Soymeal trade was estimated 21,064 futures and 2,847 options. Estimated soyoil trade was 29,599 futures and 2,370 options.

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