In The News - 30/06/2005

Malaysian palm oil shadowed the trend in rival U.S. soyoil on Wednesday to clamber back from the previous day's selldown.

Players also bought in on speculation that exports data for June, due from the two cargo surveyors on Thursday, could only be 5 to 7 percent lower than May compared with initial expectations of a 10 percent decline.

Prices have been volatile in the last week, in keeping with the swings in soyoil as fund managers on the Chicago Board of Trade try and hedge on any change in weather patterns in U.S. soy growing areas.

On Tuesday, after another round of weather-driven play, palm oil futures were down 2 percent.

But it rebounded on Wednesday as CBOT soyoil recovered.

Dealers said talk that June production of palm oil could be down by five percent -- instead of up three percent as estimated earlier -- also helped.

At the close, the benchmark third-month crude palm oil futures on Bursa Malaysia Derivatives, September <KPOU5>, was up 13 ringgit at 1,422 ringgit ($374.21) a tonne.

Its high for the day was 1,423 ringgit, while the low was Tuesday's close of 1,409 ringgit.

Other traded months <0#KPO:> ended up 11 to 14 ringgit.

Overall volume was 3,081 lots of 25 tonnes each. The market usually sees 6,000 lots or more on a busy day.

In physical trade of crude palm oil, the combined months of June and July saw bids at 1,425 ringgit a tonne in Malaysia's southern and central regions, against offers at 1,430.

On Tuesday, bids/offers stood at 1,410/1,415 ringgit.

Dealers attributed the stronger market to the turnaround in U.S. soyoil after Tuesday's selldown.

In Wednesday's electronic trade, July soyoil on the Chicago Board of Trade <ZLN5> was up 0.20 cent at 24.37 cents per lb. It closed down 0.35 cent on Tuesday.

Soybean futures at the Chicago Board of Trade closed higher on Wednesday after a choppy session as traders covered short positions before the government released its acreage and grain stocks reports on Thursday.

The market was due for a bounce after diving about 80 cents in the past two days. Just past midday, soybeans turned lower on weather forecasts calling for rains to move through the parched state of Illinois.

"They're getting ready for the reports. But it still boils down to the weather," said one CBOT trader.

The eastern Midwest was in need of moisture as crops were shriveling from the heat and dryness. But some relief was expected by Thursday or Friday, triggering this week's fund-led sell-off.

New-crop November soybeans <SX5> had a 23-cent trading range, before closing 3 cents higher at $6.89 per bushel, after failing to break through $7. Old-crop July <SN5> settled 5-1/4 cents higher at $6.72 amid active spread trade as firms rolled their July positions before first notice day on Thursday.

Deliveries were expected to be light due to the wide carries reflected in the July/August spread, traders said.

The general consensus among analysts polled by Reuters was for the U.S. Agriculture Department to peg U.S. soy planted acreage at 73.078 million acres, compared with its March estimate of 73.910 million.

For soybean stocks as of June 1, the average analysts' estimate was at 716 million bushels, compared with 411 million a year ago.

Midwest cash basis bids on soybeans were steady to firm early Wednesday, with sales quiet after the roughly 80-cent drop in futures prices over the past two days.

Export business remained quiet, with importers focused on buying South American supplies.

The South American soy contract closed 5-1/2 cents lower to 11 cents higher. July <BSN5> closed 3 cents down at $6.47, after making a contract low of $6.20.

The soy products also recovered some on Wednesday, after this week's market drop. July soymeal <SMN5> closed $3.10 per ton higher at $210.20, with deferreds $3 higher to 40 cents lower.

July soyoil <BON5> settled 0.37 cent per lb. higher at 24.54 cents per lb. Deferreds traded 0.31 to 0.49 cent lower.

Funds were even to net sellers in soybeans, buyers of roughly 1,000 soyoil contracts and net sellers in meal, traders said. Commercials were net buyers of roughly 1,000 meal lots.

Malaysian palm oil closed higher on Wednesday, clambering back from the previous day's sell-off, but trade was light ahead of June exports data.

Estimated volume was large. Soybean trade was pegged at 109,694 futures and 42,697 options. Estimated soymeal volume was 57,078 futures and 3,269 options. Soyoil volume was estimated at 34,214 futures and 1,958 options.

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