In The News - 09/09/2005

Malaysian crude palm oil futures ended down in thin volume after a drop in prices of U.S. soyoil depressed the domestic market ahead of key crop and export data due on Monday.

The key November crude palm oil contract <KPOX5> on Bursa Malaysia Derivatives fell 7 ringgit to 1,381 ringgit ($366.41) a tonne on Thursday, after moving between a high of 1,379 and low of 1,386.

Other traded contracts <0#KPO:> closed down 7 to 9 ringgit.

Overall volume was 1,845 lots, against Wednesday's 2,605 lots. Trades can total 6,000 lots or more in an active market.

September soyoil <BOU5> on the Chicago Board of Trade closed down 0.23 cent at 22.62 cents per lb on Wednesday, and remained weak in Thursday's electronic session conducted during Asian trading hours <0#ZL:>.

Soyoil is palm oil's main export rival and prices of the two often move in step.

Dealers said they expected palm to remain locked in a 5 to 7 ringgit trading band until next week's crop and exports data. 

Cargo surveyors' estimates of Malaysia's September 1-10 palm oil exports are due by Monday, along with official numbers of August production, exports and closing stocks from the government-run Malaysian Palm Oil Board (MPOB).

Leading surveyor Societe Generale de Surveillance said exports of Malaysian palm oil rose 8.1 percent last month, against market expectations of a 15-20 percent growth.

The MPOB had put a drop of 7.82 percent for July exports.

Stocks grew 7.43 percent and production 7 percent, it said.

($1=3.7690 ringgit)

Soybean futures at the Chicago Board of Trade closed lower on Thursday as firms evened positions before the government releases its September U.S. soy crop estimate next week, traders said.

September soy <SU5> closed 4-1/2 cents per bushel lower at $5.90-1/2 per bushel and November <SX5> was 5-3/4 cents weaker at $6.00-1/2.

"There's still a great deal of discussion about what the yields are going to be. Some people have been putting out a little bit larger crops. I don't really think we'll know this crop until November," said Sid Love, an analyst with Kropf/Love Consulting in Overland Park, Kansas.

An average of analysts' estimates pegged this year's U.S. soy production at 2.814 billion bushels, above the U.S. Agriculture Department's forecast in August for 2.791 billion but below last year's record crop of 3.141 billion.

However, the estimates were wide ranging, from 2.768 billion to 2.895 billion, due to the variability of this year's crop.

Analysts expecting USDA to trim its forecast say soybeans were maturing early, which usually means lower yields.

Warm weather was pushing the crop along as soybean fields across the Midwest turned brown over Labor Day weekend.

emperatures were expected to remain unseasonably warm through early next week, with highs in the mid-80s to low-90s degrees Fahrenheit, a Meteorlogix weather forecaster said on Thursday.

Uncertainty about U.S. export business -- with Gulf Coast ports trying to get back into operation after Hurricane Katrina -- was bearish. That was also pressing U.S. Midwest basis markets.

U.S. cash markets remained weak as supplies were backing up into the Midwest, with the Gulf Coast struggling to become operational. Record high barge freight costs, with offers over 700 percent of tariff on the Mississippi River, were also pressuring the market.

Southern Midwest elevators were beginning to get the first loads of this year's harvest, which added pressure to basis levels in Indiana, dealers said.

The weakness in cash markets was underscored by continued futures deliveries against the September contract. There were 263 lots posted on Thursday and the Term Commodities house account stopped 147 lots.

Registrations with the CBOT rose to 1,163 lots from 963.

The soy product markets trailed the drop in soybeans. September soymeal <SMU5> closed 40 cents lower at $184.40, with the back months $1.20 lower to 70 cents higher.

September soyoil <BOU5> was 0.22 cent lower at 22.40 cents per lb., with the deferreds 0.20 to 0.30 cent lower.

The November/October crush settled 1.02 cent higher at 53.23 cents.

Ongoing deliveries against the September product contracts also weighed on the market.

In soymeal, there were 200 lots delivered, with a customer of Goldenberg Hehmeyer issuing 114 contracts. They were met by scattered stopping.

Meal registrations with the CBOT were unchanged at 200 lots.

There were 742 September soyoil deliveries. A customer of Prudential Financial issued 308 and an R.J. O'Brien customer posted 359 contracts. Stopping was scattered among firms.

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

Overnight export business included news that South Korea bought 55,000 tonnes of U.S. soymeal.

Malaysian palm oil futures closed weak overnight. Palm sagged in thin volume after a drop in prices of U.S. soyoil depressed the domestic market ahead of key crop and export data due on Monday, said traders in Kuala Lumpur.

Volume was light estimated at 39,823 futures and 23,732 options. In soymeal, an estimated 22,063 futures and 1,024 options traded. Soyoil volume was seen at 18,839 futures and 1,306 options.

(All prices in Canadian dollars unless noted.)

Canola futures on the Winnipeg Commodity Exchange continued to drift lower Thursday as harvest pressure increased, the Canadian dollar strengthened and U.S. soy futures weakened, traders said.

But scale-down commercial buying made for an orderly decline, traders said, linking the buying to new and existing exporter business, as well as some demand from crushers.

"There were huge bids under the market," a canola trader said.

Canola settled $1.90 to $5.50 per tonne lower, with November <RSX5> down $2.70 at $265.70 and January <RSF6> down $2.50 at $274.20.

Volume was estimated at 5,037 contracts, up from a total of 4,325 on Wednesday.

Farmer selling extended into the deferred March <RSH6> contract, traders noted.

Funds were also light sellers, with the net fund short position estimated between 1,900 to 3,000 contracts.

The market was also pressured by the Canadian dollar, which traded around C$1.1817, or 84.62 U.S. cents, up from C$1.1884, or 84.15 U.S. cents, on Wednesday.

An estimated 494 November/January canola spread traded between $8.20 and $8.70, with 161 November/March between $15 and $15.50 and 305 March/May between $5 and $6.

Environment Canada forecast rain would begin to move east across the Prairies, starting in Alberta on Thursday. Temperatures were also forecast to dip below 5 degrees (41 Fahrenheit) in parts of Alberta.

Showers were expected to continue through the weekend, which could slow harvest progress, traders said. 

($1 = $1.18 Canadian)

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