In The News - 01/07/2005

Malaysian palm oil futures ended down one percent on Thursday, surrendering early gains as players booked profits after weak export estimates for June.

Societe Generale de Surveillance (SGS), the main independent surveyor of Malaysian oil palm cargoes, said exports fell 9.5 from last month to 1,229,196 tonnes.

Intertek Testing Services (ITS) said exports for June stood at 1,222,636 tonnes, down 11.6 percent.

"The figures were a little unnerving to the market," said a trader. "I guess people were expecting a drop of five to seven

percent."

The benchmark third-month crude palm oil futures on Bursa Malaysia Derivatives, September <KPOU5>, closed down 14 ringgit

at 1,408 ringgit ($370.53) a tonne.

It traded as high as 1,424 ringgit at the opening, helped by Wednesday's gains by soyoil on the Chicago Board of Trade.

Sharp advances in the electronic trade of CBOT soyoil futures on Thursday did not help <0#ZL:>.

Other traded months for palm oil <0#KPO:> closed down 13 to 19 ringgit.

Overall volume was light at 3,865 lots of 25 tonnes each. The market usually sees 6,000 lots or more on a busy day.

Chicago Board of Trade soybean futures reached a month low on Thursday on waning concerns about the U.S. soybean crop after rains in Illinois and forecasts for more outweighed bullish USDA stocks data, traders said.

The new-crop November contract has dropped 95-3/4 cents since last Friday -- closing at $6.66-1/4 on Thursday, down 22-3/4, after breaching its 50-moving average $6.64-1/2 earlier in the session.

"Weather and the idea there's a little better chance for rain in Illinois ... there are maybe three chances for rain over the next week," were supportive, said Anne Frick, Prudential Securities.

"Although I still didn't see any forecast for any drought breaking amounts," she added.

Scattered showers of 0.25 to 1.0 inch fell across northern Illinois to southern Michigan. Rains of similar amounts fell through Iowa, Minnesota, Wisconsin and northwest Missouri, said Meteorlogix weather service.

Some forecasters increased their rain coverage for the Midwest by 5 percent in their noon weather updates, traders said.

Easing crop fears triggered more long liquidation with funds selling 6,000-7,000 soy contracts. The final minutes of trade turned more volatile amid end-of-the-positioning, rebounding slightly then falling, traders said.

USDA said U.S. June 1 soybean stocks were at 699.644 million bushels, below the average trade estimate for 716 bushels.

"The bean stocks are still showing a bigger consumption or an unexplained disappearance. I think it takes your old-crop carryout down 20 million bushels," said Roy Huckabay, an analyst with The Linn Group in Chicago.

Many believe the government overstated the U.S. 2004 soy crop.

Little direction stemmed from the government's planting acres figure or weekly export sales data.

The U.S. 2005 soybean plantings were put at 73.303 million acres, above the average trade estimate for 73.078 million acres but below USDA's March estimate for 73.9 million.

USDA reported weekly export sales of U.S. soybeans at 170,200 tonnes, above trade expectations for 50,000 to 100,000 tonnes.

There were slightly larger-than-expected deliveries of 484 lots against the July contract on Thursday, first notice day.

The biggest stopper was a customer of Tenco Inc., at 137 lots, likely a commercial.

Midwest cash basis bids were mixed early Thursday, with processors firming their basis to attract more sales while river bids were weak.

Export business remained light, with importers looking to South America for soybeans. There were no July contracts posted for delivery.

The South American soy contract closed 8 cents lower to 12 cents higher, with July <BSN5> down 8 at $6.39 per bushel.

The soy products markets followed the weakness in soybeans. July soymeal <SMN5> was down $3.20 per ton at $207 and the deferreds were 20 cents to $6.80 lower.

July soyoil <BON5> was down 0.93 cent at 23.61 cents per lb, slipping through its 20-day moving average of 24.08. The deferreds were 0.15 to 1.02 lower.

Export sales from last week were supportive for soymeal and neutral for soyoil. The USDA early Thursday that U.S. soymeal were 177,500 tonnes, above trade expectations for 35,000 to 70,000 tonnes.

U.S. soyoil were at 5,900 tonnes, within trade expectations for 2,000 to 6,000 tonnes.

No deliveries posted against the July soymeal or soyoil contract on Thursday was somewhat supportive. Traders

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