In The News - 24/08/2005

Malaysian crude palm oil futures closed up on Tuesday, rebounding from slight losses the previous day, on buying spurred by higher prices of rival U.S.

soyoil, dealers said.

But trade volumes were moderate due to a lack of other positive leads.

The benchmark third-month crude palm oil contract on Bursa Malaysia Derivatives, November <KPOX5>, also stayed below the psychologically-important resistance of 1,400 ringgit ($373.33) a tonne.

The contract closed up five ringgit at 1,392 ringgit, recouping all of Monday's losses. Its high for the day was 1,393.

"There's not enough momentum yet to push the market onto the 1,400 range and that's purely because the only driving factor now is soyoil," said a trader.

Soyoil futures on the Chicago Board of Trade were up in Tuesday's electronic session <0#ZL:>, with deliveries for September through December gaining 0.17 to 0.18 cent a lb.

Palm oil and soyoil compete for export destinations and their prices often move in step.

side from November, other futures contracts in palm oil settled up 2 to 6 ringgit <0#KPO:>.

Trade totalled 2,789 lots of 25 tonnes each. The market typically sees 6,000 lots or more on a busy day.

INDONESIA HAZE

Prices were down on Monday as clear weather helped allay fears of another episode of haze from Indonesian forest fires, that slowed work on local plantations two weeks ago and drove the market up.

Dealers said export estimates of palm oil for August 1 to 25, due from cargo surveyors on Thursday, will determine if the market goes beyond 1,400 ringgit.

Societe Generale de Surveillance, the main cargo surveyor for Malaysian palm oil exports, said on Monday that exports for August 1 to 20 rose 11.6 percent from July 1 to 20.

Dealers said the market could rally if SGS estimated a 20 percent growth or so for its next set data due on Thursday.

($1=3.75 ringgit)

Soybean futures at the Chicago Board of Trade closed firm on Tuesday in see-saw trade amid a rumor China had bought U.S. soy and on technical short-covering, traders said.

"Everyone was talking about China this morning but that kind of died down as the day wore on. I think this was mostly some shorts getting out," a pit source said, referring to the late short-covering gains in soy.

 Pit sources said local traders accounted for much of the trade near the close.

CBOT soy closed 3-1/2 cents per bushel higher to 1/4 lower. September <SU5> was up 3-1/2 at $6.10-3/4 per bushel. New-crop November <SX5> was up 3-1/4 at $6.20-1/2.

Volume was light, estimated by the exchange at 47,498 futures and 19,013 options.

There was a widespread rumor early in the day that China may have bought from five to 10 cargoes of U.S. soy. However, some cash-connected traders said the rumor may have stemmed from an apparent switch of South American soy orders to the United States.

Strong cash basis values for soy at the U.S. Gulf export outlets and in the interior Midwest may have led to talk that China might be buying U.S. soy, the traders said.

However, the export arena also featured news overnight from Hong Kong that Chinese soy buyers were retreating to the sidelines because higher freight rates were boosting costs for imports.

Traders had expected another round of short-covering in soy since the market remained at or near oversold levels following the fall late last week to near six-month lows.

They also said that the U.S. soy crop last week didn't improve as much as many were expecting.

USDA late on Monday said 52 percent of the U.S. soy crop was in good to excellent condition. That's near the low end of a range of trade estimates for a 1 to 3 percentage point increase. USDA also said 94 percent of the crop was setting pods.

Crop scouts on the John Deere Pro Farmer crop tour this week said at midday on Tuesday that about average soy yields could be expected in northern Indiana, in the eastern Midwest. Scouts in the western state of Nebraska said soybean pod counts were about on par with average.

Hot and dry weather in July in the east was worrisome while plentiful moisture was the norm in the western Midwest.

Cash basis bids for soy in the Midwest on Tuesday were firm and farmer selling remained slow.

Technical support in the November contract at $6.15 per bushel was briefly broken, driving the contract to a session low of $6.14-1/2. Resistance at $6.24 was broken, driving the contract to a session high of $6.26.

The nine-day relative strength index for November closed Monday at 29, below the benchmark 30 level that technical traders view as an oversold area.

Soymeal closed 60 cents per ton higher to $1.40 lower with the market following soybeans. September <SMU5> was up 10 at $190.00 per ton.

Soymeal volume was estimated at 22,536 futures and 1,160 options.

Soyoil also was firm, boosted by the short-covering gains in soybeans, the traders said. September <BOU5> was up 0.13 at 22.56 cents per lb.

Soyoil volume was estimated at 20,973 futures and 4,006 options.

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

Winnipeg Commodity Exchange canola futures settled higher on Tuesday, supported by gains in the allied U.S. soy market and by steady exporter-related buying, traders said.

But commercial selling and prospects for a large canola crop kept gains in check, traders said.

"Harvest is around the corner," a canola trader said. 

"There's lots of grain laying out there: it's just a matter of drying it out and picking it up."

Canola ended 50 cents to $1.90 per tonne higher, with November <RSX5> up 70 cents at $277.40 and January <RSF6> up 80 cents at $285.50.

Volume was estimated at 6,897 contracts, up from a total of 3,232 on Monday.

Rumors that China had bought a cargo of Canadian canola last week for delivery by the end of December provided some support. No business could be confirmed.

Traders thought China has bought as many as four cargoes of canola so far. Mexican buying has also been supportive.

Overnight business to Japan was estimated at 2,000 tonnes.

Commercial selling and light farmer hedges were noted between $277.00 and $278.00 per tonne, basis November.

Statistics Canada will release its production estimates on Friday.

An estimated 1,970 November/January spread traded between $8.20 to $8.50, with most trading at $8.50.

Other spreads included 54 November/March between $15.50 and $16.20, 28 November/July between $29.50 and $31.30, 50 November 2005/November 2006 between $35.50 and $36.00, 50 January/March at $6.90 and 11 January/November 2006 at $27.00.

($1=$1.20 Canadian)

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