In The News - 20/07/2005

Malaysia's crude palm oil production is likely to fall by about 100,000 tonnes on the year in July/December 2005 to 7.93 million tonnes, Hamburg-based newsletter Oil World forecasts.

This follows a strong increase in January/June production of 1.2 million tonnes.

"Exports can only rise (in July/December) if stocks are reduced below the year ago level," it said.

Demand for Malaysian palm oil remains strong and Oil World estimates the country's July/December exports will still rise to 7.14 million tonnes against 6.71 million tonnes in January/June.

This would mean Malaysia's end-December 2005 palm oil stocks could fall to 1.34 million tonnes from 1.49 million tonnes at end December 2004, it said.

"An important price determinant to watch in the near to medium term will be the extent to which the growth in Malaysian palm oil production slows down," it said.

"Palm oil prices will also find support if the weather-induced price strength in the U.S. soybean complex is sustained."

But palm oil is currently mainly competing with South American soyoil in world markets, it said.

"Particularly Argentine soybean oil supplies are large this quarter, keeping prices at wide discounts from U.S. origin," it said. "For the time being this is putting a lid on palm oil prices."

Soybean futures at the Chicago Board of Trade shed nearly 5 percent of their value on Tuesday on fund selling tied to profit-taking with some rainfall in the U.S. Midwest also weighing on prices, traders said.

"There's an opportunity for showers right now, primarily in the central Midwest, before this heat buildup," said Dale Gustafson, analyst at Citigroup. "At this moment, I probably wouldn't look for another decline in conditions next week."

USDA late Monday reported a 1 percentage point drop in U.S. soy conditions from the good to excellent category.

CBOT soy closed 4 to 36-3/4 cents per bushel lower. August <SQ5> was down 34-3/4 at $6.82-1/2 per bushel and new-crop November <SX5> was down 36-3/4 at $6.91.

Volume was estimated by the exchange at 98,413 futures and 51,262 options.

Technical sell-stops were triggered when the August contract broke technical support at $7.06-1/2 per bushel and again at $6.99.

"I think the trade was looking at rains that were a little  bigger than expected in Iowa on Monday and that may have been enough to scare out some of the longs," Gustafson said.

Pit sources said funds who had been recent buyers of soy began selling at least some of those positions in a spate of profit-taking in a volatile U.S. Midwest weather market.

The sell-off occurred despite outlooks for a turn to very hot weather later this week in the Midwest which is expected to add further stress to the U.S. soybean crop.

Hot and mostly dry weather is likely in the U.S. Midwest crop region beginning Wednesday and continuing through next week, a private forecaster said on Tuesday.

"It will be very hot and mostly dry next week. The hot temperatures will add stress to the crops in the Midwest," said Meteorlogix forecaster Joel Burgio.

Burgio said temperatures would rise to the upper 90s (degrees Fahrenheit) to possibly the 100 F level by the weekend and extending through early next week through much of the U.S. corn and soybean growing region.

Weather worries, waning conditions for the U.S. crop and the corresponding volatility in the market remain the key factor in soybean futures.

"Right now, which is about like it's been every day for a while, there's a chance for showers, but they're not very big and crops need more than showers right now to keep from losing more yield," Gustafson said.

The USDA Monday said 53 percent of the U.S. soybean crop was in good to excellent condition. That's down from 54 percent a week ago and below the 68 percent of a year ago.

USDA also said 63 percent of the crop was blooming and 16 percent was setting pods.

Traders and analysts continue to keep an eye on the spread of Asian soy rust in the United States.

The USDA announced on Monday on its rust-monitoring Web site that an "extremely low level" of soybean rust disease was found in a field in Mississippi. Soy rust has now been found in Florida, Georgia, Alabama and Mississippi.

Exports were quiet overnight and cash basis bids for soybeans in the Midwest on Tuesday were steady to weak after sales picked up this week but movement was light early Tuesday.

Soymeal futures closed $6.00 to $11.00 per ton lower,  following soybeans. August <SMQ5> was down $10.10 at $214.10 per ton.

Soymeal volume was estimated at 36,305 futures and 3,177 options.

The tumbling soy also pressured soyoil futures 0.80 to 1.20 cents per lb lower. August <BOQ5> was down 1.08 cents at 24.46 cents per lb.

Soyoil volume was estimated at 35,638 futures and 3,186 options.

Malaysian palm oil futures closed weak overnight. Traders in Kuala Lumpur said the market ignored gains in rival soyoil as talk of weak exports in July suppressed buying.

Back

For More Inquiries:
Our e-mail : [email protected]