In The News - 02/08/2005

Malaysian exports of oil palm products for July could fall 11.5 percent to 1,088,369 tonnes from the 1,229,196 tonnes tracked for June, Societe Generale de Surveillance, a cargo surveyor, said on Monday.

The figure was 2.4 percent lower when compared with SGS's estimate of 1,114,671 tonnes for July 2004.

SGS said its latest estimate comprised 994,333 tonnes of palm oils and 94,036 tonnes of oleochemicals and lauric oils.

In the palm oil category, 116,123 tonnes were made up of RBD palm oil, 496,063 tonnes of RBD palm olein, 129,899 tonnes of RBD palm stearin and 118,513 tonnes of crude palm oil.

China was the biggest buyer of Malaysian oil palm products for July, taking 227,995 tonnes, followed by Pakistan with 84,050 tonnes, and the United States with 73,854 tonnes.

European Union countries, another major destination, accounted for 237,178 tonnes of the export total.

Soybean futures on the Chicago Board of Trade closed firm on Monday, supported by weather uncertainty for August, the critical yield-determining period for U.S. soybeans, traders said.

But beans came off their highs late as corn collapsed.

Weather should play a bigger role in soybean prices than in corn during August, traders said. Soy yields are determined in August as the crop fills pods, while July pollination is crucial for corn.

"It's typical at these critical weather junctures for the market to build in premium, then take it out after that critical period," said Chip Whalen, senior risk manager with Commodity Ingredient Hedging in Chicago.

"In the case of corn, you tend to build it in during July, then the market tends to drift lower. In beans, that surge tends to come in August," he said.

So far, August looks warm for soybean development. U.S. soybean fields received little to no rain over the weekend and the Midwest was expected to be dry through Wednesday. However, midday weather forecasts were a touch wetter for Wednesday, which added some pressure.

August <SQ5> soybeans closed 1-1/4 cent higher at $6.73 per bushel. New-crop November <SX5> was 3/4 cent higher at $6.87-1/2.

New-crop December corn <CZ5> was down 4 cents per bushel at $2.44-1/4.

After the markets closed, the U.S. Agriculture Department released its updated U.S. soy ratings, leaving its view of the U.S. soybean crop unchanged -- 54 percent good to excellent. Traders expected conditions to improve by 2 to 4 percentage points after last week's rains.

The market opened lower, pressured by heavy commercial deliveries, traders said.

CBOT delivery equivalents are significantly higher than CIF soybeans at the U.S. Gulf, encouraging commercials to deliver beans, traders said.

There were 1,308 August soybean deliveries on Monday. The Term Commodities house account posted 901 lots. The biggest stopper, at 379 lots, was a customer of R.J. O'Brien.

Registrations with the CBOT were unchanged at 1,279 lots.

The export picture cast a bearish tone.

USDA reported early Monday only 2.8 million bushels of soybeans were inspected for export last week. That was below trade estimates for 4 million to 9 million. China did not ship any U.S. soybeans.

In global news, China's beleaguered soy crushers should not expect relief this year from a heavy capacity overhang that is squeezing margins and could force some to go bankrupt or merge, industry officials and traders said in Beijing.

Crushers based in the world's largest importer of soybeans are currently operating at just under half of nationwide capacity of about 70 million to 75 million tonnes, they estimated.

Midwest cash basis bids for soybeans early Monday were mostly steady, but processors in Decatur, Illinois, dropped their spot bids 5 cents.

The soymeal market followed the firmness in soybeans, coming off its highs late. August soymeal <SMQ5> closed steady at $212.40 per ton, with the deferreds steady to up $1.50.

An easier tone to U.S. cash soymeal markets weighed on the nearby. But there were no deliveries posted against the front month on Monday, typically a supportive factor.

Soyoil was pressured by technical selling by funds and heavy commercial deliveries against the August contract.

There were 1,052 soyoil lots posted. The Cargill house account issued 1,000 lots and a Tenco customer was the biggest stopper, at 507 lots. CBOT soyoil registrations late Friday increased to 2,480 lots from 1,480.

CBOT August soyoil <BOQ5> settled 0.23 cent per lb. lower at 24.08 cents.

Malaysian palm oil futures ended lower as weakness in rival U.S. soyoil and worries about falling exports weighed on the market.

Export news featured Iran buying 35,000 tonnes of Brazilian crude degummed soybean oil at $466 a tonne FOB at its latest tender.

Overhanging all three markets were large net long positions held by funds.

The Commodity Futures Trading Commission late Friday showed large speculators increased their net long position in CBOT soybean futures in the week ended July 26. In soymeal and soyoil, funds remained heavily weighted to the long side but they did cut their longs.

Winnipeg Commodity Exchange canola futures closed mixed on Friday as exporter demand helped offset pressure from sharp declines in the U.S. soy market, traders said.

"We saw exporters step up to the plate," one canola trader said, adding that the canola buyers appeared to be covering recent sales to China and Mexico.

November canola <RSX5> ended down 30 cents, or 0.1 percent, at $300.50 per tonne, and January <RSF6> closed up $1.60, or 0.5 percent, at $309.50.

Volume was estimated by the exchange at 3,730 contracts, down from 3,924 on Thursday.

An estimated 235 November/January spread traded between $7.30 and $7.80.

Position-evening was noted ahead of a Canadian civic holiday on Monday. WCE contracts will not trade on Monday, but the volatile Chicago Board of Trade soy complex will be open.

CBOT soybeans closed lower Friday on profit-taking and uncertainty about forecasts for rain in the eastern U.S. Midwest next week, U.S. traders said.

WCE traders noted light farmer hedge sales of canola above $300 per tonne. Farmers have been reluctant to price much canola, even though crop conditions in most parts of the Prairies look excellent and some traders are predicting bumper crops.

Light rains and isolated thunderstorms were forecast for parts of the Western Prairies on Friday, but the near-term forecast was for mainly hot, dry weather, Environment Canada said.

The West Coast vessel line-up listed eight shipments of a total of 193,000 tonnes of canola slated to load before the end of August, before new-crop harvest swings into full gear.

WCE feed grain futures closed lower, with barley pressured by hedge selling ahead of the long weekend, traders said.

October barley <ABV5> ended down $1.60 at $120.70 per tonne. Barley volume was estimated at 461 contracts, up from 133 on Thursday.

October feed wheat <WWV5> ended 40 cents lower at $103.10 per tonne, with December <WWZ5> unchanged at $108.00.

Feed wheat volume was estimated at 935 contracts, up sharply from 78 on Thursday. Spread trade was the main feature, with 450 October/December spread trading at $4.00 and $4.10.

Commercials were buyers while commission houses were rolling positions forward to new-crop months, traders said.

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