In The News - 06/07/2005

KUALA LUMPUR, July 5 (Reuters) - Malaysian palm oil rose for a third straight day on Tuesday, closing up 1.3 percent, after

Chicago soy prices firmed in post-holiday trade in Asia.

The Chicago Board of Trade was closed on Monday for the U.S. Independence Day holiday, depriving crude palm oil futures on

Bursa Malaysia Derivatives of fresh leads.

It reopened for electronic trading in Asia on Tuesday, with soybean futures rallying on reports of dry weather in Illinois, the United States' top soy growing area.

Soyoil for August delivery <ZLQ5> was also up 0.37 cent a pound, after showing a 0.13 cent loss in early trade.

"It's good that we got some solid direction in the afternoon from the soyoil and that's partly the reason why we're up," said a palm oil trader in Kuala Lumpur.

Soy and palm products compete for exports and prices on the CBOT and Bursa Malaysia often move in step.

At Tuesday's close, the benchmark third-month crude palm oil contract on Bursa Malaysia, September <KPOU5>, was up 18 ringgit, or 1.3 percent, at the day's high of 1,436 ringgit ($377.89) a tonne. The contract has risen a total of 28 ringgit over the last three days.

Other contract months <0#KPO:> settled up 13 to 18 ringgit. The volume transacted was 5,502 lots of 25 tonnes each -- not far below the 6,000 lots typically seen on a busy day.

Escalating weather worries powered soybean futures at the Chicago Board of Trade to a nearly 6 percent higher close on Tuesday, traders and analysts said.

"The moisture over the eastern Midwest was disappointing over the weekend and Illinois is the state everybody's watching right now," said Jason Roose, analyst for U.S. Commodities, Des Moines, Iowa. "Illinois is having the fourth driest four months in history from March to July."

CBOT soy closed unchanged to 42-1/2 cents per bushel higher. July <SN5> was up 38-3/4 cents at $7.12-1/4 per bushel. New-crop November <SX5> was up 42 at $7.28.

Volume was heavy, estimated by the exchange at 103,473 futures and 31,261 options.

Active new-crop November reached its 50-cent-per-bushel trading limit during the initial 45 minutes of trading with broad-based buying, mainly by funds, boosting prices, pit sources said.

Traders said the drought or near-drought conditions in parts of the eastern Midwest crop region, especially in top producer Illinois, was the key reason soy futures rallied.

Meteorlogix weather on Tuesday said drought continues to be the main concern for the central and eastern Midwest with only light showers over the weekend, and little rain was expected during the next five days or more. Temperatures, however, do not appear to be much of a problem for growing soy, Meteorlogix said.

The harsh weather has been cutting into crop conditions and CBOT traders expected a decline of 2 to 4 percentage points in soy condition ratings in USDA's weekly crop progress report set for release after the close.

There also were some mounting concerns about the potential spread of soybean rust, traders said.

"The tropical storms might spread rust but it's too early to tell right now," a pit source said.

USDA said late on Monday that tropical storms Cindy and Dennis might enhance the spread of rust in areas of the U.S. Southeast.

Follow-through support also was noted after the short-covering rally on Friday, the traders said, but the large supply of soy continues to restrain rallies along with overall good crops in the western Midwest.

Exports were quiet over the weekend and deliveries on the July contract totaled 477 lots amid scattered stopping of the soy. Registrations of soy with the CBOT were unchanged at 1,202 lots.

Cash basis bids for soy in the Midwest were steady to firm and farmer selling was slow.

Friday's CFTC commitments of traders report showed that large speculators trimmed their heavy net long position in CBOT soybean futures but remained long by a more than 3-to-1 ratio in the week ended Tuesday, June 28. Overall noncommercial open interest fell in the week. Funds were long 80,445 lots, down 8,847, and short 23,852, down 10,860 lots from the week before.

Soymeal futures closed $7.00 to $13.80 per ton higher following soy in a volatile weather market. July <SMN5> was up $11.30 at $220.80 per ton.

Soymeal volume was estimated by 29,906 futures and 1,699 options.

There were no deliveries posted Tuesday against the July contract and registrations with the CBOT were unchanged at 246 lots.

Friday's CFTC Commitments of Traders report showed that large speculators sharply down-sized their heavy net long stance in CBOT soymeal futures in the week ended Tuesday, June 28. But they remained long by an 11-to-1 ratio. Funds were long 34,673 futures contracts, down 16,034 lots from the prior week, and short 2,977, down 7,051.

Soyoil futures closed 0.30 to 1.19 cents per lb higher with soyoil also taking its cue from the strong rally in soybeans. July <BON5> was up 1.15 at 25.30 cents per lb.

Soyoil volume was estimated at 22,142 futures and 1,342 options.

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