In The News - 05/09/2005

Malaysian crude palm oil futures ended firmly up on Friday as a burst of short-covering and speculative buying helped strengthen a market lukewarm

earlier in the day.

Dealers could not think of much fundamental reasons for the market's strength, but said the benchmark contract, which came close to touching 1,390 ringgit, may just test the key 1,400 resistance next week.

"It's hard to say what's contributing to this sudden, new-found vigour as even the export numbers have not been great," said a trader.

"But for whatever it's worth, we could trip 1,400 ringgit next week if CBOT soyoil prices remain supportive."

Soyoil futures on the CBOT, or Chicago Board of Trade, were up as much as 0.60 cent a pound at Thursday's close and remained firm in Friday's electronic session conducted during Asian trading hours <0#ZL:>.

Soyoil is palm oil's main rival and their prices often move in tandem.

But palm oil futures in Kuala Lumpur were up on Thursday too, when CBOT soy was down sharply the day before.

At Friday's close, the benchmark third-month crude palm oil on Bursa Malaysia Derivatives, November <KPOX5>, settled at 1,386 ringgit ($368.62) a tonne, up 9 ringgit from Thursday.

At midsession, the contract was up just 2 ringgit.

Its high for the day was 1,387 and the low 1,376.

The broader futures market <0#KPO:> was mixed, closing down one ringgit to up 9 ringgit.

Overall volume was 4,049 lots of 25 tonnes each. The market typically sees 6,000 lots or more on a busy day.

Export estimates released by leading cargo surveyor Societe Generale de Surveillance on Thursday showed of a rise of only 8.1 percent for August, against the market's hopes of a 15 to 20 percent expansion.

Dealers said a stronger ringgit (MYR=), standing at 3.76 to the dollar compared with Thursday's rate of 3.77, also made dollar-denominated trade of palm oil less attractive.

($1=3.76 ringgit)

Soybean futures at the Chicago Board of Trade slid on Friday amid concerns about export shipping out of the U.S. Gulf, which was crippled after Hurricane Katrina, traders said.

"The slowdown of grain shipments is the biggest thing. Until New Orleans is open it's not going to be good for the markets," said one CBOT floor broker.

September soy <SU5> closed 7-1/4 cents per bushel lower at $5.88-1/2. New-crop November <SX5> was 8 cents weaker at $5.99 -- closing below the psychologically bearish mark of $6.

Trade was on the lighter side ahead of the three-day U.S. holiday weekend. CBOT markets will be closed on Monday for Labor Day and reopen with the electronic session on Monday evening.

Traders estimated that funds sold about 2,000 soybeans. Some buying by commercials, Bunge, Cargill Inc. and ADM Investor Services was noted.

Prices reversed from Thursday's higher close when there was more optimism that export operations would soon resume out of the Gulf. That area ships 55 to 65 percent of all U.S. grain and oilseed exports. But there were still many questions on Friday about when exports would resume.

"It's still unclear to us when the Gulf will be reopened for vessels," said a river trader whose company has export facilities at the Gulf Coast.

There were fewer futures deliveries against the September contract on Friday, compared with the past two days. Weak U.S. cash markets sparked the heavy deliveries earlier this week.

There were only 65 September soy deliveries on Friday, down from 1,101 on Thursday. The biggest stopper was an ABN AMRO customer, with 45 lots.

CBOT soybean registrations were unchanged as of late Thursday at 1,326 lots.

Private analysts raised their estimates of the U.S. soybean crop. But traders were expecting the U.S. soybean crop to grow as August rains were seen increasing yield potential.

Informa Economics estimated the U.S. soybean crop at 2.840 billion bushels, while brokerage FC Stone on Thursday pegged the crop at 2.835 billion. That compared with the government's crop projection in August of 2.791 billion.

South American soybean closed steady to 3-1/2 cents per bushel lower, with November <BSX5> down 1 at $6.62.

The soymeal and soyoil markets followed the weakness in soybeans. September soymeal <SMU5> closed 40 cents lower at $184.10 per ton, with the deferreds 20 cents to $1.50 lower. September soyoil <BOU5> was 0.29 cent weaker at 22.53 cents per lb., with the back months 0.25 to 0.45 lower.

Overnight deliveries against both product markets cast a bearish tone.

There were 35 deliveries posted against the September soymeal contract on Friday. A customer of UBS Securities issued 27, while a Rand Financial customer stopped 14 lots.

CBOT soymeal registrations were at 100 lots late on Thursday, unchanged from the previous day.

There were 331 deliveries posted against the September soyoil contract on Friday. A customer of Refco's Century Group  issued 165, while the ADM house account stopped 172 lots.

Registrations with the CBOT late on Thursday were at 3,828 lots, unchanged from late Wednesday.

Malaysian crude palm oil futures ended higher on Friday as a burst of short covering and speculative buying helped strengthen a market that was lukewarm earlier in the day.

Volume was on the lighter side. In soybeans, an estimated 40,820 futures and 14,564 options traded. Estimated soymeal trade was 20,153 futures and 1,111 options. Soyoil volume was seen at 21,424 futures and 901 options.

(All prices in Canadian dollars unless noted)

Canola futures on the Winnipeg Commodity Exchange ended lower on Friday, weighed by declines in Chicago soybeans and light harvest pressure.

November canola <RSX5> settled $2 lower at $272.60 per tonne, and January <RSF6> was down $1.20 at $280.60.

The losses come one day after heavy fund buying in the November contract rallied the market on Thursday.

"The beans were a factor today," a trader said, referring to soybeans falling sharply on the Chicago Board of Trade as U.S. Gulf ports remained shut for a sixth day due to Hurricane Katrina.

Traders said there was also pressure from expectations that the harvest would progress over the weekend in parts of the Prairies, including Saskatchewan.

The traders said funds were absent from the market after being active on Thursday. There was also a lack of farmer selling, which kept the hedge pressure to a minimum.

Chicago Board of Trade November soybeans <SX5> closed 8 cents lower at US$5.99 per bushel. CBOT December soyoil <BOZ5> ended 0.43 cent lower at 22.87 U.S. cents a lb.

($1 = $1.18 Canadian)

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