In The News - 13/06/2005

Malaysian palm oil was up almost 1 percent after friendly supply-demand data helped the market rebound from the previous day's selling.

But the benchmark crude palm oil futures contract on Bursa Malaysia Derivatives remained below 1,380 ringgit a tonne, after briefly rising above that level which it fell through on Thursday.

"The market should have closed above 1,380, given all of today's sentiment," said a trader. "But some determined sellers obviously didn't want that to happen."

At Friday's close, Bursa Malaysia's benchmark third-month crude palm oil contract, August, settled up 11 ringgit at 1,373 ringgit ($361.32) a tonne.

Its high for the day was 1,385 ringgit, against a low of 1,367.

The contract fell 27 ringgit, or nearly 2 percent, on Thursday after talk of a bearish supply-demand picture for palm oil in June.

But the official Malaysian Palm Oil Board (MPOB) contradicted such speculation with data on Friday showing palm oil stocks at end-May -- which form the opening inventories for June -- down 12.42 percent compared with the figure from end-April.

Analysts from five plantations surveyed by Reuters had predicted a drop of only 7.3 percent in May stocks.

MPOB said output in May was up 4.21 percent over April, just below Reuters' survey result of 4.3 percent. 

It put exports for May at 22.36 percent, slightly above the survey forecast of 20 percent.

Trade in Malaysian palm oil futures has been lethargic for weeks, with investors worrying that demand could dip from June, leading to a build-up in stocks that weighs on prices.

Even before the release of May's numbers on Friday, the market was talking of a 10 percent drop in June exports and a 5 percent rise in this month's closing stocks, dealers said.

Persistent speculation that Malaysia may revalue its ringgit -- from the present fixed rate of 3.8 to the dollar -- is also preventing prices from rallying even in the face of good fundamentals.

A higher ringgit will make palm oil, sold in dollars, more expensive. Malaysia is the world's largest palm oil producer and can influence global prices of the commodity. 

The broader futures market closed up 11

The Chicago Board of Trade soybean market closed lower on Friday after a volatile session with weather unknowns driving the market up then down, traders said.

There were conflicting outlooks on how much rain will move through the parched areas of the eastern U.S. Midwest. Some forecasters were calling for up 2 to 4 inches over the dry areas of Illinois, while others expected much less with rainfall of 0.10 to 0.50, weather forecasters said.

Indiana and Ohio were expected to see good coverage.

"The market believes the wetter version," said Vic Lespinasse, a floor broker with A.G. Edwards.

July soybeans <SN5> closed 7 cents lower at $6.66-1/4 per bushel, while the deferreds were 4-1/4 to 6-3/4 cents weaker. New-crop November was down 6-1/4 at $6.78.

Volume was estimated at 86,608 futures and 22,780 options.

The market opened higher, supported by a bigger-than-expected drop in U.S. end stocks made by the U.S. Department of Agriculture early Friday and weather jitters, traders said.

But traders sold the higher open, taking profits before the weekend. Funds sold about 3,000-3,500 soybean contracts. Cargill Investor Services and Rand Financial each sold 1,000-1,500, traders said.

"I think Sunday night, this market could be up 25 cents or down 25 cents, depending on whether this moisture turns up this weekend. It's very important to us. But as far as today, this crop report wasn't really all that bullish or all that bearish. A little friendly because we did get the reductions in carrryout," said Roy Huckabay, an analyst with The Linn Group, a Chicago trade house.

U.S. 2004/05 soy end stocks were estimated by USDA at 320 million bushels, down from USDA's May forecast for 355 million and the average trade estimate of 330 million. The drop in stocks reflected an increase in soybeans used by crushers and sold for export.

U.S. 2005/06 soy stocks were pegged at 255 million bushels, below last month's forecast of 290 million bushels.

Some underpinning stemmed from outlooks that Asian soy rust could be moving northward as Tropical Storm Arlene hits. The USDA's rust-monitoring Web site said on Thursday that Tropical Storm Arlene's path across the Gulf of Mexico could blow soybean rust spores into Alabama and neighboring states by early next week.

Friday was also the first day that the expanded speculative position limits go into effect.

Weakness in the U.S. cash markets as business was slow contributed to the drop in futures, traders said.

The South American soy contract settled lower, with July down 9 cents at $6.54 per bushel. No trades were reported.

The soymeal market turned lower following soybeans. Softer cash markets worldwide as end users turn to cheaper sources for high protein in feed rations was bearish. July was under added pressure as firms rolled nearby long positions before the start of the delivery period at month's end.

U.S. 2004/05 and 2005/06 meal stocks were left unchanged at 250,000 tons.

July soymeal closed $1.50 per ton lower at $2

11.40 per ton, while the deferreds were down $1 to up 20 cents.

Soymeal volume was estimated at 30,090 futures and 1,206 options.

CBOT soyoil futures were pressured by reminders of ample supplies of U.S. soyoil stocks. USDA raised its U.S. 2004/05 end oil stocks to 1.526 billion lbs from 1.241 billion.

July soyoil <BON5> closed down 0.39 cent at 22.74 cents per lb, with the deferreds down 0.15 to 0.41 cent.

Soyoil volume was estimated at 27,396 futures and 2,731 options.

Malaysian palm oil futures closed higher overnight.

Funds sold about 2,500 soymeal lots and 3,000-4,000 soyoil, traders said.

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