In The News - 23/08/2005

Indonesia will proceed with plans to sharply boost palm oil output over the next three years to quench the thirst of bio-fuel makers, despite opposition from environmental groups, the agriculture minister said on Monday.

Anton Apriyantono added that Indonesia would aim to sharply cut sugar imports in 2006 following a bumper domestic sugarcane harvest. Jakarta is also studying the benefits of growing genetically modified crops.

"We will consider incentives for the palm oil sector and of course the environment will be our priority," he told Reuters in an interview. "We will have to boost output. Not only do we expect increased demand for food but we also expect a huge market for bio-energy to open up."

He did not specify what incentives the government was considering for the sector.

Apriyantono said Indonesia, the second-largest producer and exporter of palm oil, after Malaysia, would aim to boost the crop area under palm plantations to 8 million hectares in the next three years from the current 5 million.

Indonesia produced 12 million tonnes crude palm oil in 2004. Area under palm oil in Indonesia has doubled since 1999.

Plans by Indonesia to boost output come at a time when environmentalists are blaming the latest forest fires, and the haze that followed, on palm plantations. Critics say workers light the fires to clear land, an illegal practice they say has been largely overlooked by the government.

In addition, Indonesia is considering setting up the world's biggest palm plantation -- covering an area of 1.8 million hectares -- in Kalimantan, along the border with Malaysia.

Bio-fuels are taking on renewed global importance as countries seek to cut hazardous emissions. Palm oil's emergence in the market comes decades after the introduction of ethanol, made from sugarcane, and other additives.

Malaysian exports of oil palm products for Aug. 1 to 20 could rise 11.6 percent to 716,690 tonnes from the 642,032 tonnes tracked for July 1 to 20, Societe Generale de Surveillance, a cargo surveyor, said on Monday.

But the figure could be down 1.3 percent if compared with SGS's estimate of 725,922 tonnes for Aug 1 to 20 last year.

SGS said its latest estimate comprised 629,871 tonnes of palm oils and 86,819 tonnes of oleochemicals and lauric oils.

In the palm oil category, 61,705 tonnes were made up of RBD palm oil, 314,365 tonnes of RBD palm olein, 51,132 tonnes of RBD palm stearin and 86,475 tonnes of crude palm oil.

China was the biggest buyer of Malaysian oil palm products for Aug 1 to 20, taking 117,418 tonnes, followed by Egypt with 70,080 tonnes, and the United States with 61,935 tonnes.

European Union countries accounted for 150,356 tonnes of the export total.

Soybean futures at the Chicago Board of Trade closed higher on Monday because the market was oversold technically and due for a short-covering recovery, traders said.

"It was one of the quietest trades we've had recently, just a little recovery bounce," a pit source said.

Volume was thin amid quiet dealings with some forecasts for drier weather this week in the U.S. Midwest and the Delta soy region also giving soy futures a bit of a lift, they said.

CBOT soy closed 5 to 10 cents per bushel higher. September <SU5> was up 10 at at $6.07-1/4. New-crop November <SX5> was up 9-3/4 at $6.17-1/4.

The CBOT estimated volume at 42,230 futures, down from 69,741 lots on Friday, and 19,894 options.

Traders said soy futures were due for an upward adjustment after falling last week to near six-month lows on fund long-liquidation that was tied to improved crop weather in the Midwest.

The fall last week drove the nine-day relative strength index for November to 20 by the close on Friday, well below the benchmark 30 level that technical traders view as an oversold area.

Friday's CFTC commitments report showed that as of last Tuesday, large speculators were long 65,536 lots of soy futures and short 27,383 lots.

Also, there may be a few weather jitters around because August weather remains important for soy production since the crop is setting and filling pods.

Meteorlogix weather early Monday said only a few light showers would move through the western Midwest this week and temperatures would range narrowly either side of normal. In the eastern Midwest, it will be dry this week with cooler temperatures expected, Meteorlogix said.

Exports were quiet over the weekend and cash basis for soy in the Midwest were weaker amid slow farmer selling.

The USDA early Monday said 5.5 million bushels of soybeans were inspected for export last week. That's within the range of estimates for 4.0 million to 9.0 million.

Traders were watching for results of the annual crop tour of seven Midwest states which began early Monday and will conclude with final results released late on Friday.

Crop scouts on Monday said soy potential in Ohio was down from a year ago but better potential than last year was seen in South Dakota.

Soymeal closed $2.00 to $3.60 per ton higher, following soybeans in a technical recovery. September <SMU5> was up $3.10 at $189.90 per ton.

Soymeal volume was estimated at 20,292 futures and 3,891 options.

Soyoil also followed soybeans higher in a technical recovery. Soyoil gained from 0.15 to 0.26 cent per lb. September <BOU5> was up 0.15 at 22.43 cents per lb.

Soyoil volume was estimated at 16,276 futures and 2,322 options.

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

Winnipeg Commodity Exchange canola futures ended narrowly mixed on Monday as harvest anticipation weighed on the market, but lack of farmer

selling provided support, traders said.

"Everybody knows that harvest is around the corner and they know the market will come to them," a canola trader said.

Canola settled $1.50 per tonne higher to $1.50 lower, with November <RSX5> up 20 cents at $276.70 and January <RSF6> down 10 cents at $284.70.

Volume was estimated at 3,155 contracts, down from a total of 3,860 on Friday.

The canola crop escaped significant frost damage late last week when overnight temperatures dipped to near freezing.

Farmers have had some good harvest weather and will probably see more later this week, traders said.

Statistics Canada will release its projections for the crop on Friday, but traders were expecting near-record production.

That was keeping canola weak relative to Chicago Board of Trade soybean futures, although traders said canola should slip further compared to soy.

Farmers have so far been reluctant to sell their canola, but harvest pressure could increase in two or three weeks, traders said.

Light hedges and commercial selling were seen on Monday, met by light export-related buying.

An estimated 770 November/January spread traded mainly between $7.80 to $8.10.

($1=$1.20 Canadian)

Back

For More Inquiries:
Our e-mail : [email protected]