In The News - 16/08/2005
Malaysian crude palm oil futures closed up after data showing a steady pick up in palm oil exports helped the market rebound from a weak morning.
Dealers said they expected the market to remain at 1,370 to 1,380 ringgit ($365-$368) a tonne, supported by strong demand and a possible drop in August production of palm oil due to fewer working days on plantations.
Prices hit a three-week high on Friday after the government declared an emergency in two areas of a major oilpalm-growing state due to haze from Indonesian forest fires.
In an emergency, the government can order the closure of estates and factories, among other actions.
The haze enveloping the central state of Selangor cleared after a change in wind direction, and rains, at the weekend.
But dealers remained bullish on outlook due to an encouraging trend in palm oil exports for August.
Societe Generale de Surveillance (SGS), the leading surveyor of Malaysian palm oil exports, said on Monday it had tracked a shipment of 571,006 tonnes for August 1 to 15, up 17 percent from what it had monitored for July 1 to 15 [ID:nKLR235423].
The cargo surveyor had reported a steep decline in estimates for July versus June.
But it reversed the trend since the start of August, putting a 19 percent rise for the first 10 days of this month compared with July 1 to 10 [ID:nKLR144366].
"It's a steady growth as far as demand is concerned," said a trader. "Now what we are concerned about is how production is going to fare this month."
Production rose seven percent in July due to higher yields.
At Monday's close, the new benchmark third-month crude palm oil contract on Bursa Malaysia Derivatives, November <KPOV5>, settled up 9 ringgit at the day's high of 1,389 ringgit ($370.40) a tonne.
The
broader market was up two to 10 ringgit <0#KPO:>.
But trade was a mere 3,018 lots of 25 tonnes each -- just about half of the level seen on a typically active day.
Dealers attributed the thin volume to weak soyoil prices on the Chicago Board of Trade <0#ZL:>. Soyoil and palm oil compete for export destinations and the two markets often move in step.
($1=3.75
ringgit)
The Chicago Board of Trade soybean market plunged to three-month lows on Monday as improving crop prospects after weekend rains across the U.S. Midwest ignited fund long liquidation, traders said.
"The
rain makes beans in August," said Roy Huckabay, analyst with The Linn Group
in Chicago.
"But
the real culprit was (September) meal falling below $202-$205. That's been
support and we took it out with gap action," he said.
September
soy <SU5> closed 27-3/4 cents weaker at $6.12-3/4 per bushel and new-crop
November <SX5> was 28-1/4 lower at $6.19-3/4.
The
market was technically weak going into the session, closing below its 50- and
100-day moving averages on Friday. November approached its 200 MA of $6.14-1/2,
falling to $6.16 on Monday.
Soymeal
futures fell below the $200 psychologically bearish level, with
September <SMU5> closing $10.60 lower at $191.60.
The
next level of support in September soymeal was $184-$185, lows made in April,
analysts said.
"They
(funds) are just blowing out of their positions," said one CBOT floor
broker.
Funds
sold an estimated 12,000-15,000 soybeans, 6,000-8,000 soymeal and 4,000-5,000
soyoil. Cargill Investor Services sold 3,000 November soy, traders said.
The
U.S. soybean crop was soaking up August rains, improving yield potential,
traders said. August is the critical time for soybeans as they set and fill
pods.
Meteorlogix
weather service early Monday said beneficial rain for filling corn and soy
pod-setting was received over the southern portion of the western Midwest and in
central and eastern areas of the eastern belt.
"We
got a little bit more rain than we expected," Meteorlogix forecaster Mike
Palmerino said. "This rainfall hasn't ended the drought, but it has
stabilized crops."
But
Palmerino said conditions will dry out and temperatures will be warmer this week
on the Corn Belt.
As
traders expected, the USDA after the close reported that 51 percent of the U.S.
soybean crop was in good-to-excellent shape, unchanged from the previous week.
The
market was lower despite a larger-than-expected July crush reported by the
National Oilseed Processors Association on Monday. NOPA said the July U.S. soy
crush was 133.8 million bushels, above an average trade estimate for 128.8
million.
Also
supportive were reports that top buyer China purchased a few cargoes of new-crop
U.S. soybeans for October delivery, traders in Malaysia said. But there was talk
of the sale late last week in CBOT markets.
U.S.
weekly export inspections remained low but were within trade estimates. USDA
reported that 6.4 million bushels were inspected for export last week, compared
with estimates for 3 million to 8 million.
Soyoil
futures followed soybeans lower in a volatile weather market, but soyoil gained
on soymeal. September soyoil <BOU5> was down 0.43 cent at 22.30 cents per
lb, with deferreds down 0.30 to 0.53 cent. The September crush was down 0.30
cent at 54.07 cents per bushel.
Also
bearish for the products was NOPA data. The association said U.S. soymeal
exports in July were 383,643 tons, down about 10,000 tons from June. U.S. soyoil
stocks grew during July to 1.576 billion lbs., from 1.564 billion in June.
Malaysian
palm oil futures closed firm. Palm climbed on a pickup in palm oil exports,
traders in Kuala Lumpur said.
Volume
was large with soybean trade estimated at 91,094 futures and 47,441 options.
Estimated soymeal volume was 39,594 futures and 3,867 options. In soyoil, an
estimated 29,935 futures and 1,898 options traded.
In
the CBOT delivery market, there were 77 soybean, 3 soymeal lots and 50 soyoil
contracts posted against the expired August contracts on Monday.
But
they were met by strong stopping, likely commercial, with the Term Commodities
house account taking 68 soybean deliveries. The Cargill Investor Services house
account stopped the soymeal, and a Prudential Securities customer took the soy
oil.
Trade
data from the Commodity Futures Trading Commission on Friday showed large
speculators cut their net longs in CBOT soybeans, soymeal and soyoil futures
during the week ended Aug. 9. But they remained heavily weighted to the long
side especially in soybeans and soymeal.
(Note:
all prices in Canadian dollars unless noted.)
Winnipeg
Commodity Exchange
canola futures grazed six-month lows on Monday after U.S. soy futures tumbled,
but canola bounced back on late
commercial buying, traders said.
Canola settled $2.70 to $4.90 per tonne lower, with November canola <RSX5> down $4.70 at $278.50 and January <RSF6> down $4.60 at $286.70.
Volume was estimated at 4,412 contracts, down from a total of 7,891 on Friday.
Canola followed the sharp losses at the Chicago Board of Trade, where soybeans touched three-month lows on better crop weather and on fund selling.
Commercials were noted sellers of canola, pushing November to lows of $274.10 per tonne, down 3 percent from Friday's close.
Sell-stops were triggered under $280.00 per tonne, basis November, traders said.
Farmers were light sellers, traders said.
"I think farmers are kind of panicking on their old-crop (stocks)," a canola trader said.
But farmers have been reluctant to sell new-crop supplies, traders said.
Funds were seen on both sides of the market, traders said, with estimates of the net fund position ranging from more than 1,500 short to around even.
Routine Japanese buying provided some support as values dropped, traders said.
The market bounced back near the close, which some traders attributed to export-related buying but others deemed commercial short covering.
"They think the move was overdone to the downside today," a trader said.
An estimated 522 November/January spread traded mainly between $8.20 and $8.60 with 108 November/July trading between $30.60 and $32.00 and 52 November/March between $15.50 and $15.90.
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