In The News - 09/08/2005

Malaysian crude palm oil futures extended their losses in Monday's morning trade, weighed down by persistent weakness in rival U.S. soyoil.

Concerns that the official Malaysian Palm Oil Board (MPOB) may put a sharply higher figure for production and stocks in July versus June also hit sentiment, dealers said.

At lunch break, the benchmark third-month palm oil contract on Bursa Malaysia Derivatives, October <KPOV5>, settled down 4 ringgit at 1,340 ringgit ($357.43) a tonne.

The low for the morning was 1,333 ringgit and the high 1,347.

Other traded months settled 4 to 6 ringgit lower.

Overall volume stood at 3,076 lots of 25 tonnes each, a sharp jump from Friday morning's 691 lots. 

Dealers said prices, which on Thursday hit their lowest level since February 22, could remain under pressure due to fears of an increase in palm oil production and slackening demand.

Government-run MPOB will issue on Wednesday production, exports and closing stock numbers for July. 

Two independent shipping surveyors will issue on the same day export estimates for the first 10 days of August.

Soyoil futures on the Chicago Board of Trade fell for a second straight day on Friday, with the August contract declining 0.53 cent to 23.62 cents a lb <0#ZL:>.

Soy and palm compete for export destinations and their prices often move in step.

In physical dealings of crude palm oil on Monday, August contract was offered at 1,335 ringgit a tonne in the southern region of Malaysia. In the central zone, offers versus bids stood at 1,332.50/1,327.50 ringgit.

Trades were reported at 1,330 ringgit in the south and 1,327.50 in the central zone.

($1=3.75 ringgit)

The Chicago Board of Trade soybean market closed mostly higher on Monday but backed off its highs on updated wetter forecasts for the upper U.S. Midwest crop region later this week, traders said.

"Midday forecasts calling for rains south of Interstate 80 was the stopper," said one CBOT trader.

August soy <SQ5> closed 2 cents higher at $6.60-1/2 per bushel and new-crop November <SX5> settled 1-3/4 cents up at $6.70-3/4 after climbing 11 cents to a session high of $6.80 near the open.

The market was due for a bounce after the November contract slipped below its 100-day moving average of $6.59-3/4 per bushel on Friday.

Open interest fell by roughly 10,700 contracts on Friday.

"Friday's break set the tone of the market. Everyone is waiting for the crop condition and Friday's (USDA) crop reports to give some direction. The market felt tired at $7 and we'll probably keep in a choppy range until Friday," said one cash-connected trader.

After the close, USDA said in its weekly crop progress report that U.S. soy ratings dropped 3 percentage points -- 51 percent of the crop in the good to excellent categories. Traders expected conditions to fall by 1 to 3 points after the hot, dry spell last week.

The government will release its August 2005 U.S. soy crop estimates on Friday. Early trade estimates for the U.S. soybean crop are at roughly 2.8 billion bushels, down from USDA's July estimate of 2.890 billion.

Forecasts for mostly dry and warm weather this week in the eastern U.S. Midwest crop region gave early support. That area of the country was hardest hit by a lack of rain. But moisture during August, the key pod-setting and pod-filling time period, can increase yield potential.

Weekend export business featured Taiwan tendering on Tuesday for 40,000 to 60,000 tonnes of U.S. or South American soybeans. Cheaper ocean freight and firmer South American soy values made U.S. offers for October/November/December delivery competitive with South America, floor traders said.

Traders in Tokyo said importers in Japan would be busy this week seeking corn and soy cargoes ahead of the summer holiday period. They said Taiwan importers would be buying after running down high domestic stocks.

U.S. grain export inspections were market-neutral as they remain low but within trade expectations. USDA reported early Monday that 4.767 million bushels of soybeans were inspected for export last week. That was within trade estimates for 2.0 million to 5.0 million bushels.

There were no deliveries on the August contract on Monday. Registrations with the CBOT declined to 1,499 lots from the previous 1,532.

Midwest cash basis bids for soybeans early Monday were mixed, firm at river terminals and steady to weak at interior locations, dealers said.

The soy-product markets followed the choppy moves in soybeans, moving off their highs as soybeans dipped.

August soymeal <SMQ5> closed 80 cents higher at $211.70 per ton, with the back months up 80 cents to down $3.50.

August soyoil <BOQ5> was 0.18 cent weaker at 23.44 cents per lb, with the deferreds down 0.20 to up 0.02 cent.

Malaysian palm oil futures closed weak overnight. Palm ended off its lows as buyers returned to the market after a rebound of rival U.S. soyoil, traders in Kuala Lumpur said.

There were no soymeal deliveries on the August contract and no soymeal registered with the CBOT. In soyoil, there were 247 lots posted against the August contract. An LBS customer issued all of the soyoil and there was scattered stopping.

Soyoil registrations with the CBOT unchanged at 2,934 lots.

Friday's CFTC commitments report showed that large speculators increased their large net long position in CBOT soybean futures in the week ended Aug. 2. In soyoil and soymeal funds trimmed their net longs.

Futures volume was on the lighter side. Estimated soybean trade was 51,877 futures and 20,233 options. In soymeal, trade was pegged at 21,459 futures and 3,047 options. Soyoil volume was estimated at 17,387 futures and 780 options.

(Note: all prices in Canadian dollars unless noted.)

Winnipeg Commodity Exchange canola futures closed firm on Monday but off the day's highs, mimicking the trend in U.S. soybeans, traders said.

November canola <RSX5> settled up $1.50 per tonne or 0.5 percent, at $288.60, after hitting a session high of $290.40.

January <RSF6> closed up 30 cents at $296.40. 

The November/January spread traded between $7.70 and $8.10, brokers said.

Outright trade was light. Volume was estimated by the exchange at 4,283 contracts, less than half of Friday's total of 8,695.

Chicago Board of Trade soybean futures set the tone for oilseeds, climbing sharply after the opening bell on forecasts for dry weather in the U.S. Midwest this week, and a technical bounce from Friday's weak close.

However, updated midday forecasts added more rain to the U.S. region, and beans and soyoil futures backed off their highs, knocking back canola as well.

Canola was also weighed by hedge pressure as farmers sold old-crop supplies to clear space ahead of the 2005 harvest.

"We've got a fabulous crop coming," one trader said.

Crushers were buyers, drawn by strong crush margins, and light Japanese scale-down pricing underpinned values.

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