In The News - 17/06/2005

Malaysian palm oil rose 1.5 percent after a rally in rival soyoil but the key resistance of 1,400 ringgit a tonne was unbroken with players showing restraint ahead of next week's exports data.

The possibility of a currency revaluation -- the Archilees heel of the market for weeks now -- may also have tempered the bullish mood, dealers suspected.

A higher ringgit will mean less money for palm oil sellers who quote in dollars. The Malaysian unit has been fixed at 3.8 to the dollar for the last six years.

"I think 1,400 ringgit is still a decent resistance level for this market as there are issues like exports performance and the ringgit peg that are unresolved at this time," said a trader.

"Even if we break 1,400 tomorrow, I expect that to be the resistance in the near term," he said.

After a blistering growth of around 20 percent in May, palm oil exports from the world's largest producer have hit a low, with preliminary figures for June falling short of trade expectations.

Two cargo surveyors, Societe Generale de Surveillance and Intertek Testing Services, reported this week drops of 10 percent and 16 percent, respectively, for palmoil exports between June 1 and 15 compared with May 1 to 15.

Their estimates for June 1 to 20 are due on Monday. 

At Thursday's close, the new benchmark third-month crude palm oil futures contract on Bursa Malaysia Derivatives, September <KPOU5>, ended up 20 ringgit, or 1.5 percent, at 1,395 ringgit ($367.11) a tonne.

The high for the day was 1,399 ringgit.

Other traded contracts <0#KPO:> closed up 16 to 19 ringgit.

Overall volume was heavy at 6,234 lots of 25 tonnes each, against Wednesday's close of 4,128 lots. 

Soyoil futures on the Chicago Board of Trade rallied to a near three-month high on Wednesday, driven by dry weather in the United States and President George W. Bush's comments urging lawmakers to pass an energy bill to boost soy diesel and ethanol.

The Chicago Board of Trade soybean market closed mixed on Thursday after this week's rally tied to prospects for a smaller U.S. soybean crop, traders said.

Most of the week's strength came from worries about hot, dry weather moving into the U.S. Midwest next week. But some forecasters were not aggressive in their extended outlooks on Thursday, which was making the bulls less aggressive.

"My sense is that the market is trading a forecast that has yet to be verified. I'm also not seeing the panic buying that one would normally see in crop-scare rally," said Anne Frick, oilseed analyst with Prudential Securities.

The weather models had conflicting extended forecasts early Thursday, Meteorlogix forecaster Joel Burgio said. The European model showed a stronger ridge developing over the western Midwest and central Plains during Monday through Wednesday than the U.S. model.

However, both models predicted the ridge weakening from Wednesday through Friday next week.

Meteorlogix weather service forecast highs in the upper 80s to low 90s degrees Fahrenheit for next week in the Midwest, with higher temperatures staying mainly in the Plain states.

July soybeans <SN5> closed 1-3/4 cents lower at $7.00-3/4 per bushel, with the deferreds down 1/4 cent to up 3-3/4.

New-crop November <SX5> was 1/4 lower at $7.20-1/2 -- nearly a 20-cent premium to July -- the widest the spread has reached since last November, analysts said.

November remains underpinned by outlooks for a smaller than expected U.S. crop. The potential for heat and dryness stressing the crop next week remains supportive. There were also renewed worries about Asian soy rust moving into the heart of the U.S. soybean belt after Tropical Storm Arlene.

Then, several traders expected at least a 500,000 acreage cut as wet weather in the Dakotas and Minnesota prevented farmers from getting the last of their beans planted.

Those worries kept the CBOT soybean market technically strong and created fresh buying interest by commodity funds.

But cash markets were soft as demand for U.S. soybeans eased.

Importers turned to cheaper South American supplies. USDA's export data released early Thursday showed U.S. soy sales at 182,800 tonnes (old-crop only). That was above the estimates for 50,000 to 150,000 tonnes, but far below levels seen earlier in the year.

Included in the weekly tally was a cancellation of 44,700 tonnes by China, the world's top bean buyer.

The South American soybean market closed mixed with July <BSN5> up 1 at $6.95 per bushel. Estimated volume was large at 180 futures.

The soymeal market turned lower on a technical setback. Waning demand for U.S. soymeal was bearish as end users switched to cheaper sources of high-protein feed from soymeal. There was also speculation that cheap South American meal could spark U.S. buyers to soon begin importing meal, traders said.

July soymeal <SMN5> was down 90 cents at $223 per ton, with deferreds down $1.80 to up $5.50.

USDA weekly soymeal export data was viewed market-neutral. The government said 53,700 tonnes of U.S. soymeal were sold for export last week, which was within estimates for 40,000 to 80,000 tonnes.

CBOT soyoil futures turned lower by the close, following the late weakness in soybeans. There was some profit taking after Wednesday's rally when soyoil broke through all key-moving averages.

July <BON5> was down 0.07 cent at 24.10 cents per lb, with the deferreds down 0.15 to up 0.03.

Weekly export data was dismal.

USDA's export sales report Thursday showed export sales of U.S. soyoil last week at a minus 100 tonnes. That was below estimates for 2,000 to 6,000 tonnes.

Malaysian palm oil futures closed higher overnight. Traders in Kuala Lumpur said palm followed rival CBOT soyoil higher.

Volume was heavy again on Thursday. In soybeans, an estimated 113,446 futures and 44,054 options

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