In The News - 30/08/2005

Malaysian crude palm oil futures remained firm in Monday trade, supported by a resurgent soyoil market in Chicago.

But trade was light ahead of a public holiday on Wednesday to mark Independence Day, and the scheduled release on Thursday of August export estimates.

The third-month crude palm oil futures contract on Bursa Malaysia Derivatives, November <KPOX5>, was up 9 ringgit at 1,375 ringgit ($366.67) a tonne by midday -- just off the morning's high of 1,376 ringgit.

Other traded months <0#KPO:> settled up 7-11 ringgit.

Volume was light, at 1,093 lots of 25 tonnes each. The market usually sees 3,000 lots or more on a busy morning.

"People are not really keen to do much, with the August export numbers just days away and a public holiday in between," said a trader.

Malaysia's palm oil exports this month have been indicated higher than in July, although the numbers have not excited the market.

Societe Generale de Surveillance, the leading surveyor of Malaysian palm oil exports, has estimated a 10 percent rise from July based on shipments tracked between Aug. 1 and 25.

Short covering helped Malaysian palm oil rebound on Friday from two straight days of losses, but gains were limited by a weak close in Chicago soyoil on Thursday.

Soyoil and palm oil compete for exports and their prices often move in step.

The Chicago market turned around on Friday, with September and December contracts posting new intraday highs in Monday's electronic trade <0#ZL:>.

($1=3.7650 ringgit)

Soybean futures at the Chicago Board of Trade closed higher on Monday on a technical recovery and amid jitters about the potential impact of Hurricane Katrina, traders said.

"I suppose the hurricane could be supportive if some of the crop is damaged, but it's actually bearish (for futures) from a shipping standpoint," said Anne Frick, analyst for Prudential Securities.

Frick said most of the strength in soy futures was because of technical short-covering after declines last week.

Soy closed 3 to 6 cents per bushel higher. September <SU5> was up 3 at $5.94 per bushel. November <SX5> was up 4 at $6.06.

Volume was estimated by the exchange at 51,142 futures and 8,517 options.

Traders said the gains in soy were due to short-covering, but there also was some concern about the effect of Hurricane Katrina on parts of the U.S. soy crop. Katrina made landfall in southern Louisiana early Monday and churned inland.

Heavy rainfall from the storm would slow the early harvest of soy and also may harm some of the crop grown in the most affected states, including Alabama, Mississippi and Louisiana.

Export loadings in the U.S. Gulf were expected to be halted for several days and soy shipments on the Mississippi River to the Gulf have come to a standstill.

Barges hauling grain to the port of New Orleans sought shelter along the Mississippi River as Katrina churned menacingly in the Gulf of Mexico, a port official and trade sources said.

Most CBOT floor sources said soybeans were undergoing a technical recovery after fund selling drove the market to a 6-month low late last week. Soy ended higher on Friday on short covering amid an oversold technical mode and follow-through was evident on Monday, pit sources said.

The nine-day relative strength index for November closed Friday at 28, below the benchmark 30 level that technical traders view as an oversold mark.

Technical support in the November contract was at $5.95 per bushel and resistance was at $6.04.

Some traders said the Pro Farmer crop tour's estimate on Friday for this year's U.S. soy crop at 2.783 billion bushels may have given futures some support as it was slightly below the U.S. Agriculture Department's current estimate for 2.79 billion bushels.

"They may have traded the lower Pro Farmer number, but we also often get a rally in soybeans going into September," Frick said.

Meteorlogix weather service said mostly dry weather would prevail in the western Midwest this week and temperatures will be normal to above normal.

There is a chance of rain this week in the eastern Midwest, with totals of 4 inches or more in the southern portion of the crop region as a result of Hurricane Katrina, Meteorlogix said.

Exports were quiet over the weekend, cash basis bids for soy in the Midwest late on Friday were mostly steady and farmer selling remained slow.

USDA said Monday 4.7 million bushels of soy were inspected for export last week. That's within the range of estimates for 4 million to 9 million bushels.

Friday's CFTC Commitments of Traders report showed that as of last Aug. 23, large speculators were long 59,712 soybean futures and short 30,532 lots.

Soymeal futures closed 50 cents to $1.70 per ton higher, following soybeans in a technical recovery after the steep declines last week. September <SMU5> was up 60 cents at $184.30 per ton.

Soymeal volume was estimated at 26,393 futures and 1,982 options.

Export activity over the weekend included news that Israel had issued a tender for 30,000 tonnes of corn products and 7,000 tonnes of soymeal, European traders said on Monday.

Friday's CFTC Commitments of Traders report showed that, as of Aug. 23, large speculators were long 16,096 soymeal futures and short 7,315 lots.

Soyoil futures closed 0.11 to 0.24 cent per lb. higher, following soybeans and on a technical recovery after last week's tumble. September <BOU5> was up 0.16 at 22.24 cents per lb.

Soyoil volume was estimated at 28,514 futures and 1,457 options.

Malaysian palm oil futures closed firm overnight. Traders in Kuala Lumpur said palm was tracking a resurgent soyoil market in Chicago, but profit-taking ate into gains.

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

Winnipeg Commodity Exchange canola futures closed narrowly higher on Monday, supported by strength in allied U.S. soy markets, traders said.

But a lack of interest from domestic crushers and a large 2005 Canadian canola crop hung over the market, limiting upward momentum. Statistics Canada on Friday put the Canadian crop at 8.3 million tonnes, the second-largest on record.

"The trade has more fully digested the StatsCan report that confirmed we have a big crop," one trader said.

Most-active November canola <RSX5> closed up 60 cents, or 0.2 percent, at $271.20 per tonne and January <RSF6> was up 90 cents at $279.90. Spreading was the feature, with November/January done at a carry of $8.50 to $8.90.

Volume was estimated at 6,193 contracts, down from 6,622 on Friday.

Feed grain futures closed quietly higher, supported by light short covering and a firm tone in U.S. corn futures, traders said.

October barley <ABV5> ended 60 cents per tonne higher at $117.90, with December <ABZ5> up 40 cents at $119.40.

($1=$1.20 Canadian)

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