In The News - 26/07/2005

Malaysian crude palm oil futures fell almost 2 percent on Monday, extending losses from the previous week as export estimates for July remained soft amid a lack of direction from rival soyoil.

For a second time since Friday, the benchmark contact slipped past two key levels, settling just above the major support of 1,350 ringgit a tonne.

It surrendered a total of 54 ringgit, or 4 percent, in two straight days.

"People are in a liquidating mood," said a trader.

"They're afraid stocks will balloon at the end of this month because of what exports have been doing, and what we're hearing about August production isn't helping," he added.

Societe Generale de Surveillance, the main surveyor of Malaysian oil palm cargoes, said on Monday exports for July 1 to 25 were estimated to have fallen almost 25 percent from June 1 to 25.

Output of palm oil, by contrast, might grow three percent in July from the official figure of 1.2 million tonnes in June, dealers said.

The thinner exports could mean that stocks of palm oil at the end of July could swell beyond June's 1.18 million tonnes to move as high as 1.22 million, they said.

At Monday's close, the benchmark third-month palm oil contract on Bursa Malaysia Derivatives, October <KPOV5>, was down 26 ringgit, or 1.9 percent, to 1,356 ringgit ($361.79) a tonne.

It fell as much 2.1 percent on Friday as producers tried to shield the commodity, sold abroad in dollars but traded at home in ringgit, from losing competitiveness after Malaysia dropped its currency peg of 3.8 to the dollar.

Economists say the ringgit is undervalued and the palm oil industry is bracing to cut prices if the currency appreciates.

The ringgit <MYR=>, on a managed float, had risen to 3.7480 per dollar on Monday, compared with 3.7780 in late Asian trade on Friday.

Monday's low for the October contract was 1,353 rimggit -- just above 1,350 support.

Other traded months settled down 6 to 28 ringgit <0#KPO:>.

Volume stood at 8,715 lots of 25 tonnes each, below Friday's 10,085 lots but still heavier than the 6,000 lots seen on a typically busy day.

Dealers said uncertainty in U.S. soyoil also weighed on prices.

August soyoil on the Chicago Board of Trade (CBOT) fell as much as 0.12 cent in Monday's electronic trade, although it ended up 0.20 cent on Friday at 24.51 cents per lb <ZLQ5>.

Soybean futures at the Chicago Board of Trade closed firm on Monday after choppy trading amid weather concerns, traders said.

"There were some rains but not enough and it's going to heat up again next week so right now everything is up in the air," said Vic Lespinasse, floor spokesman for A.G. Edwards and Co. "It's really choppy right now."

CBOT soy closed 1/2 to 5-1/2 cents per bushel higher. August <SQ5> was up 1/2 at $6.69-3/4 per bushel. November <SX5> was up 3 at $6.82-1/2.

Pit sources also said unwinding of some corn/soy spreads helped buoy beans at the expense of corn and position-squaring was beginning to surface ahead of Friday, first notice day for deliveries on the August contract.

Some underpinning may have stemmed from very hot weather over the weekend and early this week in the Midwest, which may have hurt some of the U.S. soy crop.

A variety of weather in the U.S. Midwest likely will continue leading to volatile Chicago Board of Trade corn and soy futures trading, a private forecaster said on Monday.

"Again it's a mixed bag. The 100 (degrees Fahrenheit) to 104 F temperatures over the weekend weren't favorable (for crops) and although there will be some showers early this week, more rain is needed," said Meteorlogix forecaster Joel Burgio.

Some rains moved through the Midwest last week and traders said they expected USDA late Monday to show a steady to 2 percentage point improvement in U.S. soy conditions last week.

USDA said late Monday that it rated 54 percent of the U.S. soybean crop as good to excellent as of Sunday, up from 53 percent the week before.

Exports were quiet over the weekend and traders in Seoul and Tokyo said on Monday east Asian buyers were seeking corn, soybeans, soymeal and wheat this week. However, some were waiting to see if shipping costs sink lower than their recent dip to their lowest levels in more than a year.

USDA early Monday said U.S. soy inspected for export last week totaled 7.6 million bushels, within the range of estimates for 4.0 million to 9.0 million.

Cash basis bids for soybeans in the Midwest on Monday were steady to firm with some processors raising their bids to attract more sales.

Friday's CFTC Commitments of Traders report showed large speculators trimmed large net long position in CBOT soybean futures in the week ended July 19. Funds were long 65,890 lots, down 3,059 from the week before, and short 25,523, down 488 lots from the week before.

Soymeal was down 40 cents to up $3.60 per ton reflecting the choppy trade in soy. August <SMQ5> was down 40 at $212.20 per ton.

Friday's CFTC Commitments of Traders report showed large speculators expanded their huge net long stance in CBOT soymeal futures in the week ended July 19. Funds were long 26,227 futures contracts, up 556 lots from the prior week, and short 1,408, down 1,363.

Soyoil closed 0.08 to 0.30 cent per lb higher with the market choppy and generally taking its cue from soybeans. August <BOQ5> was up 0.08 at 24.59 cents per lb.

There was nothing in the export hopper to buoy soyoil. Iran said Monday it had purchased 20,000 tonnes of soyoil from Brazil for shipment in September.

Malaysian palm oil futures closed lower overnight. Traders in Kuala Lumpur said palm fell almost 2 percent, extending losses form the previous week, as export estimates for July remained soft amid a lack of direction from rival soyoil.

Friday's CFTC Commitments of Traders report showed large speculators expanded their heavy net long in CBOT soyoil futures in the week ended July 19. Funds were long 39,689 futures contracts, up 2,772, and short 9,854 contracts, up 1,221.

Volume was moderate. In soybeans, an estimated 80,033 futures and 24,560 options traded. Soymeal trade was seen at 34,007 futures and 2,868 options. Soyoil volume was seen at 18,896 futures and 1,355 options.

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