In The News - 07/09/2005

Malaysian palm oil was almost flat at Tuesday's close after speculative selling erased early gains posted on the strength of U.S. soyoil in pre-market

trade, dealers said.

Volume in crude palm oil futures on Bursa Malaysia Derivatives was about a third of that seen on a typically busy day as investors shunned the market due to weak leads.

The benchmark third-month crude palm oil contract, November <KPOX5>, ended at 1,383 ringgit ($367.04) a tonne, down one ringgit from Monday.

Market volume <0#KPO:> totalled 1,998 lots of 25 tonnes each, against up to 6,000 lots on a busy day.

Prices had been trapped in the 1,350-1,380 ringgit range for weeks due to a lack of positive factors, although market bulls said key resistance of 1,400 might be broken if soyoil spiked higher.

Soyoil futures for October and December closed up 0.16 and 0.08 cent a pound, respectively, in the electronic session of the Chicago Board of Trade on Tuesday <0#ZL:>, ahead of the market's formal opening at 1400 GMT.

Palm oil initially rose on the strength of the CBOT, with November going up five ringgit to a peak of 1,389.

But speculative selling sent the contract down six ringgit in the afternoon to hit an intra-day low of 1,378, before it pared losses on late covering.

Dealers expected the market to continue drifting in featureless trade ahead of export estimates due next Monday for the first 10 days of September.

The official Malaysian Palm Oil Board will also release production, exports and closing stocks figures for July on Monday.

The market's leading exports surveyor, Societe Generale de Surveillance, said last week it estimated 8.1 percent growth in August shipments of Malaysian palm oil versus July.

Investors had initially hoped for growth of 15-20 percent.

($1=3.7680 ringgit)

Soybean futures at the Chicago Board of Trade rallied Tuesday amid concerns that soybean yields may be lower than expected as U.S. fields turned brown overnight, indicating the crop was mature and could not benefit from recent rains, traders said.

After the holiday weekend, there was also more optimism about export loadings at the Gulf of Mexico. September soybeans <SU5> closed 16-1/4 cents firmer at $6.04-3/4 per bushel and November <SX5> was 15-1/4 higher at $6.14-1/4.

Buying escalated when November soy pushed through its 10-day moving average of $6.06-3/4, then approached its 20-day MA of $6.19-1/2 to reach a session high of $6.18.

Commercials were buyers, including Bunge and ADM Investor Services, traders said. Commodity funds were net buyers of roughly 3,000 lots, with  Refco, R.J. O'Brien and Cargill Investor Services among the buyers of November.

At the Gulf of Mexico, some vessels were loading grain. The U.S. Coast Guard eased draft restrictions to 39 feet from 35 feet on the Panamax-size vessels used to ship grain to destinations across the globe. The normal draft for the vessels is about 42 feet, which will keep them from moving full loads on the Mississippi River for now.

"Now that we see we're maybe only a week away as far as dredging to get the bigger vessels in here the trade is getting a bit more confident," said Joe Victor, analyst with Allendale Inc. in northern Illinois.

"The other thing I would look at is weather. Any double-crop beans or the beans that were planted a little bit later than normal, the kind of weather we've had the past two weeks has not been conducive for fill, we're losing test weight and yield," said Victor.

Roy Huckabay, an analyst with The Linn Group, cited concern about the loss of yields on soybeans as they turned brown almost overnight.

"They went from green on Thursday/Friday to yellow on Monday/Tuesday -- everywhere. If you're turning yellow on Sunday/Monday, rains that you got from Katrina on Tuesday/Wednesday (last week) didn't do you any good," Huckabay said.

Those fears were highlighted in the government's weekly ratings released after the close. In Iowa, poised to be the top U.S. soy state this year, 12 percent of its plants stopped growing, well above the five-year average.

Underscoring the lack of export movement, the U.S. Department of Agriculture said Tuesday that 1.5 million bushels of soybeans were exported last week, down sharply from 4.7 million the week before. But there was talk of fresh Chinese interest in U.S. soybeans of 4 to 5 cargoes, shipped out of the Pacific Northwest.

U.S. Midwest cash markets remained weak on Tuesday as grain was backing up into marketing channels after last week's shut down at the Gulf.

That weakness in cash markets, with spot basis bids down as much as 8 cents early Tuesday, was highlighted by continued deliveries against the September contracts last week and again on Tuesday. But deliveries were lighter on Tuesday with 133 soybean lots. Term Commodities house account was the key stopper of 87 lots.

Registrations with the CBOT dropped to 980 lots from the previous 1,326.

South American soybean futures closed 10-1/2 to 16 cents higher, with November <BSX5> up 16 at $6.78 per bushel.

The soy product markets followed the strength in soybeans, with September soymeal <SMU5> up $4 per ton at $188.10 and September soyoil <BOU5> up 0.32 at 22.85 cents per lb.

Deliveries on the September soymeal contract were light at 8 lots and a Prudential customer stopped them all.

Meal registrations with the CBOT were unchanged at 100 lots.

Deliveries on the September soyoil contract totaled 267 lots and the ADM house account issued 225 lots and also was listed as stopping 153 lots.

Registrations with the CBOT were unchanged at 3,828 lots.

Malaysian palm oil futures closed flat to weak overnight.

Trade data released by the Commodity Futures Trading Commission on Friday showed that large speculators cut net long positions in CBOT soybean, soymeal and soyoil futures during the week ended Aug. 30.

Estimated volume was light. In soybeans, an estimated 48,237 futures and 27,538 options traded. Soymeal trade was pegged at 26,366 futures and 1,580 options. Estimated soyoil volume was 18,464 futures and 1,498 options.

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

Winnipeg Commodity Exchange canola futures ended lower on Tuesday, weighed by good harvest progress over the weekend, traders said.

November canola <RSX5> settled $1.20 lower at $271.40 per tonne, and January <RSF6> was down 70 cents at $279.90.

The losses came despite sharp gains in Chicago Board of Trade soybeans, which were supported by dry weather in parts of the Midwest and hopes for Gulf exports to resume soon.

The devastation of Hurricane Katrina halted grain exports from most Gulf ports for more than a week. But grain operations were resuming on Tuesday, with some companies loading vessels.

"We had pretty good harvest progress over the weekend," a trader said, adding that there was some hedge-based selling, an indication of farmer selling in the cash market.

Another trader said there were about 188 November-January spreads, trading mostly at between $8.10 and $8.70.

He said selling was mostly from commercials. "It seems like there was some farmer selling," he added.

Chicago Board of Trade November soybeans <SX5> closed 15-1/4 cents higher at US$6.14-1/4 per bushel. CBOT December soyoil <BOZ5> ended 0.35 cent higher at 23.22 U.S. cents a lb.

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