In The News - 25/08/2005

The European vegetable oil market [OILS/E] saw some profit-taking in palm oil on Wednesday, market sources said.

Palm oil was offered $2.50 to $5 down from Tuesday following Malaysian palm oil futures <0#KPO:> closed nine to 13 ringgit per tonne lower on long liquidation.

Palm olein changed hands at $397.50 a tonne fob Malaysia for both September delivery and Oct/Dec, and Jan/March traded at $400 a tonne fob.

September shipment crude palm oil fetched $400 a tonne cif Europe and Oct/Dec traded at $412.50 a tonne.

Liquid oils remained featureless with prices hardly moving during the day after sellers offered material up to five euros higher on Tuesday's CBOT soyoil futures close <0#3B0:> while buyers were holding back seeing a minor rebound.

Lauric oils were up to $15 a tonne lower on more distant positions to cut the huge premium over nearby material, which was under pressure for several days because of plenty of unsold material and little buying interest.

Malaysian crude palm oil futures fell almost 1 percent on long liquidation on Wednesday, dealers said.

 The third-month October crude palm oil contract <KPOV5> ended 13 ringgit lower at 1,377 ringgit a tonne ($367.2) on Bursa Malaysia Derivatives.

The day's high was 1,392 ringgit and the low was 1,377.

Other traded months <0#KPO:> settled 9-12 ringgit down.

Overall volume was 3,219 lots of 25 tonnes, up from 2,789 lots on Tuesday. The market typically sees 6,000 lots or more on a busy day.

"There was liquidation going on in the market, especially in the last hour and a half," said one dealer.

"There was a bit of concern about the Indonesian rupiah. It weakened a lot today, making Indonesian palm oil cheaper and more competitive."

Malaysia is the world's largest palm oil producer and exporter, while Indonesia ranks second.

The rupiah <IDR=> extended a two-week slide to hit 10,300 to the dollar, its lowest since February 2002 and marking one of its biggest single-day drops since May last year.

The Malaysian market could move in a narrow range when it opens on Thursday ahead of export data, dealers said, pegging the next viable support at 1,370 ringgit, with resistance at 1,395 ringgit.

Dealers are waiting for the export estimates for August 1 to 25 from cargo surveyors SGS and ITS on Thursday. SGS, whose numbers are more closely watched by the market, put exports at 824,241 tonnes during the first 25 days of July.

($1=3.75 ringgit)

Soybean futures at the Chicago Board of Trade closed lower on Wednesday amid fund selling and reports from a crop tour in the Midwest of solid soy yield prospects this year, traders said.

Soy fell to the day's lows near the close and new-crop November ended below key support at its 200-day moving average of $6.17-1/4. Pit sources said FIMAT Futures and Rand Financial were the noted sellers on the close.

CBOT soy closed 2 to 8-1/4 cents per bushel lower. September <SU5> was down 8-1/4 at $6.02-1/2. New-crop November <SX5> was down 7-3/4 at $6.12-3/4.

Volume was light, estimated by the exchange at 31,489 futures and 17,032 options.

Traders continued to monitor soy yield reports from this year's annual crop tour of the Midwest.

"Everything I've seen from the tour doesn't look that bad," a trader said. "Of course it's not as good as last year, but we weren't expecting it to be."

Crop scouts on the John Deere Pro Farmer tour of the Midwest said on Wednesday that soybean fields in northern Illinois had benefited from August rains. Yield potential in west-central Iowa was below the Pro Farmer three-year average, the crop scouts said. In southwest Iowa, the crop scouts reported soy pod counts above the tour's year-ago averages.

"From what I've seen so far from them in South Dakota, Nebraska, Ohio and Indiana there have been no surprises and I don't think there was anything that we weren't expecting from Illinois or Iowa today," said Dale Gustafson, analyst for Citigroup.

Drought this year in top producer Illinois had boosted soy futures while generally satisfactory weather in other states, including the other top producer, Iowa, continued to counter the bullish impact of the harsh conditions in the east.

Cooler and wetter weather in August has revived soy production prospects and current weather patterns in the Midwest were viewed as generally benign to bearish for the soy futures market.

Meteorlogix weather early Wednesday said there was a chance of showers in the western Midwest later this week and mostly dry weather was expected over the weekend. A few showers may surface in the southwest portion of the eastern Midwest on Thursday through Saturday and it should be dry on Sunday. There were no indications of extreme crop-damaging temperatures.

Exports were quiet overnight and cash basis bids for soy in the Midwest late on Tuesday were steady to firm. Farmer selling remained quiet ahead of the approaching harvest.

Traders said talk remains that China may have bought U.S. soy, but nothing was confirmed as of late Wednesday.

Technical support in the new-crop November contract at $6.18-1/4 per bushel was broken, driving the contract to a session low of $6.11-1/2. Resistance was at $6.24.

The nine-day relative strength index for November closed Wednesday at 29, just below the benchmark 30 level that technical traders consider an oversold mark.

Soymeal closed 50 cents to $2.60 per ton lower amid spillover pressure from tumbling soy. Tenco Inc. sold 300 December late in the day. September <SMU5> was down $1.70 at $188.30 per ton.

Soymeal volume was estimated at 21,467 futures and 2,301 options.

Soyoil was unchanged to 0.10 cent per lb lower, pressured by a sag in soy. September <BOU5> was down 0.06 at 22.50 cents per lb.

Soyoil volume was estimated at 14,218 futures and 667 options.

Malaysian palm oil futures closed weak overnight. Traders in Kuala Lumpur said palm fell almost 1 percent amid long liquidation.

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

Winnipeg Commodity Exchange canola futures ended lower on Wednesday, reflecting weakness in Chicago Board of Trade soy futures and sentiment that Canada will harvest a massive canola crop, traders said.

"I don't think there's a lot of reason to be long anything right now, with harvest coming up," a canola trader said.

Canola settled 70 cents to $1.90 per tonne lower, with November <RSX5> down $1.70 at $275.70 and January <RSF6> down $1.70 at $283.80.

Volume was estimated at 3,561 contracts, down from a total of 7,038 on Tuesday.

Some traders said short covering provided scale-down support, while others said continued export-related buying pared losses at session lows of $275.00 per tonne, basis November.

The Canadian dollar hit a new high for the year against the U.S. dollar on Wednesday, pressuring canola values, traders said.

Long liquidation and light farmer selling was also noted, along with some speculative selling ahead of a Statistics Canada production report, slated for release on Friday at 8:30 a.m. EDT (1230 GMT).

Trade estimates ahead of the report ranged from 7.6 million to 9 million tonnes.

The average estimate was 8.4 million tonnes, which would be the second-largest canola crop on record, and up 9 percent from last year's crop of 7.7 million tonnes.

An estimated 553 November/January spread traded between $8.20 to $8.50, with 51 November/March between $16.00 and $17.10, 60 November/July between $31.00 and $31.40, 156 November 2005/November 2006 between $36.90 and $37.90, and 64 January/March between $7.70 and $7.90.

Nearby barley futures were supported by commercial short covering and speculative buying, traders said.

($1=$1.19 Canadian)

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