In The News - 23/06/2005

Malaysian crude palm oil futures ended up on Wednesday, chasing higher prices of rival U.S. soyoil, dealer said.

Soyoil and palm oil compete for similar export destinations and their prices often move in step.

In Kuala Lumpur, the benchmark third-month crude palm oil futures contract on Bursa Malaysia Derivatives, September <KPOU5>, ended up 11 ringgit at 1,433 ringgit a tonne ($377.1).

Its intraday high was 1,442 ringgit and the low was 1,431.

Other traded months <0#KPO:> closed up 9 to 16 ringgit.

"The market ended slightly up, but whether it could still hold in the coming days, I am doubtful," said one dealer.

Overall volume was 5,776 lots of 25 tonnes each. The market usually sees 6,000 lots or more on a busy day.

Dealers said they expected the market to come down eventually due to lack of fresh news and 1,400 ringgit could be the next

viable support.

"The market rose further in the afternoon even though there is nothing new on the fundamentals. Fundamentals news, sometimes

does not carry weight," said one dealer.

"The Malaysian market is something very unique. It does not usually move in tandem with the supply and demand," said another

Malaysian dealer.

At 1050 GMT, soyoil futures on the Chicago Board of Trade (CBOT) were up in e-trade, with the July contract up $0.38 at

25.82 cents a pound <ZLN5>.

Soybean futures at the Chicago Board of Trade closed mildly higher on Wednesday, coming off highs as the market stabilized after its run to 11-month peaks, traders said.

July soybeans <SN5> rallied 17 cents on the open, then fell 2-1/4 cents later in the session.

"It's a yo-yo out here and nothing really changed in the midday weather," said one cash-connected trader.

Profit taking and some commercial hedge sales took the market off its highs. But the market remained underpinned by concerns that the U.S. soy crop was shrinking as parts of the eastern Midwest needed rain. Those worries sparked a rally overnight when the session highs were made.

CBOT July soy <SN5> closed 1-3/4 cents higher at $7.37 per bushel, with the deferreds up 8 cents to down 1-1/2 cents.

New-crop November <SX5> was 1 cent firmer at $7.54, after making a contract top of $7.75 in overnight e-trade.

Parts of Illinois, Indiana and Ohio remain exceptionally dry, with traders most concerned about Illinois -- the top U.S. soy producing state in 2004. Illinois had one of the driest springs since the Dust Bowl years in the '30s, with rainfall down about 5 to 6 inches in parts of the state, said Jim Angel, Illinois climatologist.

"The lack of actual rain is going to keep the market nervous," said Anne Frick, oilseed analyst with Prudential Securities.

However, longer term forecasts for the six to 10-day period were calling for rain to move into the eastern Midwest.

Softer U.S. cash markets amid thin export demand were viewed bearish, traders said. Good farmer sales of beans over the past week as the CBOT rallied also replenished processor supplies.

Overnight export business featured Taiwan saying it would tender on Friday for 28,000 tonnes of U.S. corn and 7,000 tonnes of U.S. soybeans.

In related news, a senior trader for Cargill Inc. said in Hong Kong cold and wet weather early this year in Northern China might reduce the country's output of corn and soy, which could lead to higher imports.

Traders were awaiting the release of the U.S. Census Bureau May crush data and Statistics Canada planting figures on Thursday. U.S. weekly export sales data will also be released Thursday.

The July South American soybean contract <BSN5> closed unchanged at $7.18-1/2 per bushel.

The soymeal market closed mixed after an early rally. The meal market lost momentum after soybeans moved off their highs. The meal market was long overdue for a correction, technically overbought and climbing to near 11-month highs.

July meal <SMN5> was 90 cents per ton lower at $230.70, with the deferreds down 80 cents to up $3.

The soaring price of U.S. soymeal was sparking domestic buyers and importers to turn to cheaper sources of high-protein feed. Japan and Indonesia are buying Indian soymeal as CBOT soymeal prices surge, traders in Singapore said on Wednesday.

The soyoil market closed mostly weaker after a choppy session. July <BON5> was down 0.12 cent per lb. at 25.32 cents, with the deferreds down 0.17 to up 0.16.

Malaysian palm oil futures closed higher. Traders in Kuala Lumpur said palm gained as it continued to chase higher prices of rival U.S. soyoil.

Indian soy and soyoil futures gained on Wednesday amid rain delays in major Indian growing regions and on gains in CBOT soy complex futures.

Estimated volume was large across the complex. In soybeans, an estimated 100,032 futures and 46,364 options traded. Soymeal trade was pegged at 37,634 futures and 2,556 options. Estimated soyoil volume was 31,649 futures and 4,026 options.

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