In The News - 14/09/2005

The European vegetable oil market [OILS/E] saw technical buying in palm oil and profit-taking in coconut oil on Tuesday, with a weaker CBOT and a strong dollar dampening demand for liquid oils, market sources said.

"Chicago eased again, still on the crop data. Palm oil was active because of short covering and olein demand from a Malaysian exporter," one broker said.

Palm oil was offered up to $5 higher on the back of steadier Malaysian palm oil futures <0#KPO:> as players covered short positions.

September delivery palm olein traded at $395 a tonne fob Malaysia, October delivery from $395 to $400, Jan/March fetched $400 and Jan/June $402.50 a tonne fob.

Crude palm oil changed hands at $415 a tonne cif Europe for October shipment and Oct/Dec, Nov/Dec traded at $417.50 and Jan/March at $427.50 a tonne cif.

Lauric oils fell on Chicago, the strong dollar and profit-taking in coconut oil.

Sellers were offering material up to $15 lower after afloat coconut oil traded at $530 a tonne cif Rotterdam, Sept/Oct at $535 and both Oct/Nov and Nov/Dec fetched $545 a tonne cif. No trades were reported in palmkernel oil.

Liquid oils were a little up with a strong dollar outweighing weakness in Chicago, but buyers showed little serious interest and no trades were reported, dealers said.

Soybean futures at the Chicago Board of Trade closed firm on Tuesday, bouncing late after holding nearby support above Monday's low, traders said.

There was also talk of fresh Chinese interest in U.S. soybeans of two to four cargoes of U.S. soybeans. No sales were confirmed but prospects of export demand and commercial pricing below the market helped the market end higher after spending most of the session lower.

"Some interest or demand is beginning to perk up," said Joe Victor, analyst with Allendale Inc.

Loadings at Gulf Coast export elevators ports were improving this week and travel restrictions eased after Hurricane Katrina. Several terminals have reopened but the key export point, the Port of New Orleans, remained closed.

The cost to move grain by barge into the Gulf from the Midwest was exorbitant, trading at 800 percent of tariff on the Mississippi River for spot shipment. But there were signs that freight was softening in the southern portion of the belt, floor traders said.

September soybeans <SU5> closed 1 cent higher at $5.76 per bushel, with volume thin before the last trading day on Wednesday. November soy <SX5> was up a penny at $5.86, sliding to $5.78 -- above Monday's low of $5.75.

Funds ended the day about even and commercials were net buyers, traders said. Commercial Bunge bought 700 November.

Soybeans were weak most of the session on lingering pressure from USDA's larger-than-expected U.S. soy crop estimate issued on Monday, traders said.

The market fell to a near seven-month low Monday, after USDA raised its 2005 U.S. soy production forecast by 65 million bushels, or 2 percent, to 2.856 billion bushels. The increase came following beneficial Midwest rains in early August.

Also bearish was a step up in harvest movement as farmers were combining early maturing beans. Yields in central Indiana were running about 40 bushels/acre, dealers said on Tuesday.

Harvest pressure also weighed on basis levels.

USDA said late Monday that 54 percent of the soy crop was in good to excellent condition, unchanged from last week. The crop was maturing quickly as 37 percent of the soybeans were dropping leaves, vs. 31 percent for the five-year pace.

"When you look at the crop progress report, the amount of the crop that is turning, that's starting to be harvested ... the high barge freight out there -- what are we going to do with all this crop? It's ultimately pressuring," one CBOT cash-connected trader said.

Mostly clear skies and warm temperatures through the Midwest promoted early harvest efforts, said Meteorlogix weather service on Tuesday. But the extended forecast called for rains to move into the Corn Belt next week, which could stall early harvesting.

The soy products closed lower, failing to follow soybeans to a firm close. September soymeal <SMU5> was down 50 cents at $177.50 per ton, a $1.30 discount to October <SMV5>.

Soft U.S. cash markets and prospects of a slowed export pace amid shipping problems out of the Gulf were bearish and kept the Sept/Oct under pressure.

September soyoil <BOU5> was 0.07 cent weaker at 21.97 cents, with the back months 0.03 to 0.10 lower.

The National Oilseed Processors Association will release its August crush data on Wednesday. Analysts expect the August crush to come in at 123.5 million to 132.0 million bushels, down from NOPA's July crush of 133.8 million.

Malaysian palm oil futures closed mostly firm after a pick-up in physical sales of oil.

For the first time since the start of the September delivery period there were no soybean, soymeal or soyoil deliveries posted early Tuesday.

Volume was light to moderate. Estimated soybean trade was 43,406 futures and 24,417 options. Soymeal volume was pegged at 27,411 futures and 2,378 options. In soyoil, an estimated 17,884 futures and 1,185 options traded.

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

Winnipeg Commodity Exchange canola futures marked late gains to end higher on Tuesday, boosted by export-related buying, concerns about weather and late gains in U.S. markets, traders said.

Canola settled 40 cents to $2.30 per tonne higher, with November <RSX5> up 40 cents at $264.80 and January <RSF6> up 50 cents at $273.50.

Canola volumes were estimated at 6,600 contracts, up from 3,603 on Monday.

The market started lower in step with Chicago Board of Trade soybeans.

Statistics Canada's July 31 stocks report confirmed traders' expectations of massive supplies, with canola stocks the second-largest on record at 1.629 million tonnes.

That was within trade estimates ranging from 1.5 million to 1.8 million tonnes, and up by 167 percent from last year's level.

"We certainly have one heck of a lot of canola to market," a canola trader said.

Farmer selling continued to be light, providing some support under the market. Scale-down support also came from Japanese and other exporter buying.

Harvest delays kept the market firm. Saskatchewan's crop report pegged canola harvest at 25 percent combined, up from 11 percent combined the previous week but behind the five-year average of 39 percent combined.

"It's going to be tough getting stuff out of the farmers' hands," a trader said.

Forecasts were for rainy, cool weather across the Prairies, which was expected to delay harvest.

Environment Canada issued frost warnings for northeastern Saskatchewan and northwestern Manitoba late on Tuesday.

An estimated 1,165 November/January canola spread traded between $8.40 and $8.80, with 445 November/March between $15.70 and $16.10.

($1=$1.18 Canadian)

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