In The News - 01/09/2005

Malaysian crude palm oil futures closed higher on Tuesday, rebounding from early losses, as the ringgit weakened against the dollar.

A rebound in rival U.S. soyoil from earlier falls also helped palm oil prices, although buyers were cautious ahead of Malaysia's Independence Day holiday on Wednesday.

The benchmark third-month November crude palm oil futures contract <0#KPO:> on Bursa Malaysia Derivatives ended up two ringgit at 1,370 ringgit ($363.40) a tonne, after trading as low as 1,356.

Overall volume was 5,564 lots of 25 tonnes each, one of the heaviest in weeks.

The ringgit fell to 3.7715 to the dollar at 1050 GMT, from its late Monday's level of 3.7690, in line with weakness in other Asian currencies as oil prices hovered near record levels.

Palm oil is exported in dollars. But its futures prices, which also determine exports prices, are quoted in ringgit.

A weaker ringgit makes exports of palm oil less expensive, boosting their competitiveness against rivals such as soyoil. 

Therefore, an adjustment in futures values is necessary. Traders said market focus was on August export data due on Thursday.

Traders expect Societe Generale de Surveillance, the leading surveyor of Malaysian palm oil exports, to estimate a growth of 10 percent for palm oil exports from last month.

FESTIVALS

Freight brokers said they had not seen the usual surge in demand for palm oil that begins around end-August and escalates towards mid-September as Asian nations buy more to cater for year-end festivals.

"These indications that demand is still soft, coupled with the volatile prices of soyoil, is keeping the market from going beyond 1,380 ringgit," said a trader.

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

Chicago Board of Trade soyoil futures rebounded from earlier losses in Tuesday's electronic trade <0#ZL:>, with September up 0.06 cent at 22.30 cents per lb at 0912 GMT.

($1=3.77 ringgit)

CHICAGO, Aug 31 (Reuters) - Soybean futures on the Chicago Board of Trade posted a double-digit price drop on Wednesday, with the nearbys closing below $6 per bushel, on concerns that exporters could lose business with the Gulf Coast shut down for a fourth day by Hurricane Katrina, traders said.

"We've now raised the specter of potentially shifting some business to South America that might have come to the U.S. Until this ship channel is cleared of debris, and the buoys reset and marked, there will be no traffic in or out of there," said Rich Feltes, director of research for Refco Inc.

Roughly 70 percent of U.S. grains and soybeans are exported out of the Gulf Coast. But export terminals remained closed, waiting for power to be restored after this week's storm devastated the area.

The United States is the world's top exporter of soybeans, followed by South America. The United States is also the No. 1 exporter of corn and wheat.

"There's only so long that you can have the Gulf shut down. You're going to get into early harvest and create a major bottleneck," said Dan Cekander, a Fimat Futures analyst.

November soybean futures <SX5> fell below key support at $6, closing 12-1/4 cents weaker at $5.98-3/4.

The September/November spread continued to weaken, with September <SU5> settling 13 cents down at $5.86-3/4 -- a 12-cent discount to November.

Traders expected the spread to widen more due to the weakness in the cash markets. That was underscored by the heavy deliveries on Wednesday, first notice day.

There were 1,086 soybean deliveries against the September contract on Wednesday, with a customer of R.J. O'Brien posting 962 lots. That was above estimates for 500 to 1,000 contracts. Stopping was scattered among firms.

Registrations with the CBOT late on Tuesday were at 1,260 lots, up from 1,144 late on Monday.

"It's bearish as they sell out the Sep and re-deliver. I doubt there will be any big stoppers tonight. The basis is so pathetically weak, especially in corn," Cekander said.

CIF soybeans at the U.S. Gulf were also sharply lower at Wednesday's midsession. Midwest cash basis bids for soybeans were steady to weaker amid stalled export business out of the Gulf, dealers said.

South American soy futures settled mixed, up 4 cents to down 10 cents. November <BSX5> was down 10 cents at $6.55.

The soy product markets followed the weakness in soybeans. September soymeal <SMU5> was also seeing added pressure from unexpected futures deliveries.

September soymeal closed $2.20 per ton lower at $182.40, with the deferreds $2.60 lower to up 20 cents. September soyoil <BOU5> was 0.45 cent per lb. weaker at 22.41 cents and the back months were 0.32 to 0.50 cent lower.

There were 100 meal deliveries on first notice day, with stopping scattered among firms. Traders did not expect any soymeal deliveries on first notice day.

In soyoil, there were heavy deliveries of 1,412 lots on Wednesday amid scattered stopping. Traders had estimated deliveries to range from 800 to 1,200 lots.

CBOT soymeal registrations late Tuesday were 100 lots, up from none on Monday.

Soyoil registrations with the CBOT on Tuesday afternoon increased to 3,828 lots from 2,934 on Monday.

Malaysian palm oil futures closed mostly firm overnight.

Estimated volume was moderate to heavy. In soybeans, an estimated 76,903 futures and 21,841 options traded. Soymeal trade was seen at 39,198 futures and 2,022 options. Estimated soyoil volume was 35,258 futures and 4,494 options.

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

Winnipeg Commodity Exchange canola futures settled lower in modest trading on Wednesday, following Chicago soybeans lower as traders pondered

the impact of Hurricane Katrina on oilseed prices.

"It's very unclear what the devastation from Katrina means for this market. Everybody was just spinning their wheels here," said one trader.

Most-active November canola <RSX5> closed $2.80 or 1.02 percent lower at $270.80 per tonne, and January <RSF6> was down $2.70 at $279.30. The November/January spread traded at a carry of $8.10 to $8.70.

Volume was estimated at 4,790 contracts, down from 4,916 on Tuesday.

Chicago Board of Trade soybeans fell on concerns that U.S. exporters could lose business as the Gulf Coast, the main U.S. grain export site, remained shut down for a fourth day from the damage inflicted by Katrina.

Traders feared that a major bottleneck could develop if grain isn't moving soon, with the fall harvest ready to pick up steam.

CBOT November beans <SX5> closed 12-1/4 cents or 2 percent lower at US$5.98-3/4 per bushel. CBOT December soyoil <BOZ5> ended 0.49 cent lower, down 2.1 percent, at 22.80 U.S. cents a lb.

($1=$1.19 Canadian)

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