In The News - 05/08/2005

Malaysian crude palm oil futures bounced off 5-1/2-month lows but remained weak on Thursday, weighed down by losses in main rival U.S. soyoil.

The benchmark palm oil contract on Bursa Malaysia Derivatives, October <KPOV5>, ended down 14 ringgit at 1,352 ringgit ($360.53) a tonne. It fell to 1,343 ringgit in the morning, the lowest level since February 22.

Dealers said the market appeared oversold and the contract stay above the 1,350 ringgit support level.

Other traded months settled down 12 to 16 ringgit.

Overall volume doubled to 5,647 lots of 25 tonnes each, from Wednesday's 2,811 lots.

"This is a market very dependant on swings on the CBOT and yesterday's CBOT was indeed volatile," said a palm oil futures dealer in Kuala Lumpur.

Talk of imminent rain in key U.S. soy growing patches drove down soyoil futures on the CBOT, or Chicago Board of Trade, on Wednesday after fears of drought had powered a rally for weeks.

August soyoil ended Wednesday's trade down 0.72 cent at 24.30 cents a lb. The market slid further in Thursday's electronic session <0#ZL:>, with the September contact losing 0.25 cent.

Aside from soyoil, the market was also weighed down by fears of an increase in palm oil production and stocks for August, dealers said.

Five plantation firms surveyed by Reuters last week put production of palmoil in Malaysia, the world's top producer, at 3.5 percent higher in July than June due to a jump in yields. The market has since been talking of a 5.0 percent growth.

Societe Generale de Surveillance (SGS), the main independent surveyor of Malaysian oil palm shipments, had estimated exports in July to have dropped almost 14 percent from June.

($1=3.75 ringgit)

Soybean futures at the Chicago Board of Trade closed mostly firm on Thursday in a quiet and mild recovery from Wednesday's slide and on weather jitters, traders said.

"There was no clear-cut consensus as to weather next week and maybe we'll have clearer direction tomorrow. Funds sold corn and they were pretty evenly divided in beans," said Vic Lespinasse, floor spokesman for A.G. Edwards and Co.

CBOT soy closed 7-1/4 cents higher to 3 cents lower with September <SU5> up 1/4 at $6.75-1/2 per bushel. November <SX5> was up 1 at $6.82-1/2.

Volume was light, estimated by the exchange at 45,620 futures and 23,112 options.

The U.S. soy crop is in its critical pod-setting stage of development and needs rain now to ensure satisfactory production potential.

Traders said soy fell hard on Wednesday and sagged at the open on Thursday because of some forecasts for rain next week in dry areas of the U.S. Midwest.

Meteorlogix early Thursday wasn't optimistic that much if any moisture would fall soon on the dry areas of the U.S. soy belt.

The U.S. Midwest is expected to remain hot and dry this week, with above-normal heat and dryness lingering until at least the middle of August, a private forecaster predicted Thursday.

"It looks like this dry pattern will continue at least through the middle of the month," Meteorlogix forecaster Mike Palmerino said. "It will continue to deteriorate soil moisture conditions in areas of the Corn Belt already fairly dry."

A larger-than-expected number for soy in USDA's weekly export sales report released early Thursday may lend some underlying support to the nearby months.

USDA early Thursday said U.S. export sales of soybeans totaled 250,600 tonnes. That's above the range of estimates for 75,000 to 175,000 tonnes.

Exports were quiet overnight and deliveries on the August contract light at 77 lots and an R.J. O'Brien customer stopped all of the soy. A Prudential customer issued 74 lots for delivery. Registrations with the CBOT sagged to 1,641 lots from the previous 1,698.

Cash basis bids for soybeans in the Midwest were steady to firm and farmer selling stopped after the decline on Wednesday of CBOT soy futures.

Technical support in new-crop November was at $6.79 per bushel with resistance at $7.00. November Wednesday broke below its 50-day moving average of $7.00 which made that level one of key resistance during Thursday's trading session.

Soymeal closed $1.80 to $7.50 per ton higher, with September <SMU5> up $1.80 at $211.10 per ton. Pit sources said soymeal followed soybeans higher.

Soymeal volume was estimated at 18,413 futures and 540 options.

USDA early Thursday said U.S. export sales of soymeal last week totaled 75,400 tonnes. That's within the range of estimates for 50,000 to 110,000 tonnes.

There were no deliveries posted against the August contract and there was no soymeal registered with the CBOT.

Soyoil closed 0.08 to 0.33 cent per lb lower, with September <BOU5> down 0.19 at 24.21 cents per lb. Fund selling and adequate stocks of soyoil continues to pressure prices.

Soyoil volume was estimated at 19,290 futures and 2,468 options.

USDA early Thursday said 1,100 tonnes of U.S. soyoil (old-crop) was sold for export last week. That's near the low end of estimates for 1,000 to 6,000 tonnes.

Deliveries on the August contract modest at 218 lots and there was strong commercial stopping, with the Bunge house account taking 211 lots and registrations with the CBOT were unchanged at 2,480 lots.

Malaysian palm oil futures closed lower overnight. Traders in Kuala Lumpur said palm bounced off 5-1/2 month lows but remained weak on Thursday, weighed down by losses in main rival U.S. soyoil.

(All prices in Canadian dollars unless noted)

Winnipeg Commodity Exchange canola futures ended lower on Thursday, pressured by hedges associated with substantial farmer sales, traders said. 

November canola <RSX5> closed $4.60 per tonne lower at $293.80, with January <RSF6> down $4.60 at $301.70.

Traders said farmer selling was the main pressure on the market, though buying by crushers and exporters limited losses.

They noted that canola prices have fallen over the past two days.

"I think being $10 lower, canola looks attractive again," said one trader.

Volume was estimated at 5,358 contracts, up from a total of 4,598 on Wednesday.

($1 = $1.21 Canadian)

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