In The News - 21/09/2005

Chicago Board of Trade soybean futures slipped on Tuesday amid renewed bearish outlooks as U.S. soybean supplies were seen growing as harvest progresses, traders said.

The weakness in CBOT soyoil futures contributed to the sell-off in soybeans, traders said. Much of Monday's strength in soybeans was tied to the rally in CBOT soyoil as that market followed crude oil prices higher. But soybean oil followed crude oil lower on Tuesday.

"We're retreating with the energies down," said Dan Cekander, an analyst with Fimat Futures.

November soybeans <SX5> closed 4 cents per bushel lower at $5.72, and the deferreds were 3 to 4-1/4 cents weaker.

But volume was thin making the market vulnerable to stronger price moves.

Commodity funds were net sellers across the complex, selling 1,500-2,000 soybean lots, 1,000 soymeal and 1,500-2,000 soyoil. Commercial pricing 

surfaced as the market dip. In soyoil, ADM Investor Services, Bunge and Cargill Inc. were all buyers.

The soybean market was weak despite its near oversold technical status. The nine-day relative strength index for November closed at 31, close to the benchmark 30 level that traders view as an oversold mark.

Prospects of increased export demand for soybeans helped to underpin prices. There was talk that China bought two cargoes of U.S. soybeans overnight. The Gulf coast ports closed after Hurricane Katrina worked to bring loadings to a more normal level.

The U.S. Department of Agriculture said late Monday that 8 percent of the U.S. soybean harvest was complete as of Sunday, which was ahead of trade expectations for 3 percent to 5 percent harvested.

U.S. soy condition ratings fell by 1 point, with 53 percent of the crop in the good to excellent categories.

There were some concerns about harvest delays in parts of the Midwest on fallout rains from Hurricane Rita as it bore down on the Florida Keys on Tuesday. 

The storm is expected to make landfall in Texas over the weekend.

Midwest cash basis bids for soybeans were mixed early Tuesday, pressured by harvest prospects.

The soy products were lower, with the biggest drop in soyoil after Monday's rally. October soyoil <BOV5> was down 0.27 cent per lb at 22.45 cents, with the back months 0.15 to 0.38 cent lower.

October soymeal <SMV5> closed $1.20 per ton lower at $172.30 per ton, with the deferreds down 90 cents to $2.

Soymeal futures remain weak with the spot price reaching a near seven-month low on Tuesday due to soft U.S. cash markets. Outlooks for soymeal supplies growing as harvest picks up looms over cash and futures prices.

Malaysian palm oil futures closed firm overnight. Traders in Kuala Lumpur said palm followed rival U.S. soyoil. Malaysian exports of oil palm products for Sept. 1 to 20 could rise 9.1 percent to 782,157 tonnes from the 716,690 tonnes tracked for Aug. 1 to 20, Societe Generale de Surveillance, a cargo surveyor, said on Tuesday.

Crude palm oil futures closed higher on Tuesday, extending the previous day's gains, after a further rally in rival U.S. soyoil.

Optimism over export performance for this month also helped sentiment although export estimates of Malaysian palm oil for Sept. 1 to 20 came in below market expectations.

Societe Generale de Surveillance (SGS), the leading independent surveyor of Malaysian palm oil exports, said it tracked 782,157 tonnes of shipments for Sept. 1 to 20, up 9 percent from a month earlier.

The market had been expecting up to 800,000 tonnes.

The benchmark third-month palm oil contract on Bursa Malaysia Derivatives, December <KPOZ5>, ended up 12 ringgit, or 0.8 percent, at 1,426 ringgit ($378.35) a tonne.

The contract had risen 1 percent on Monday, firmly crossing the 1,400 ringgit resistance, on confidence that exports for September would do far better than August after key buyer India cut its base import prices for palm oil.

September is traditionally one of the busiest periods for trade in Malaysian palm oil, when Pakistan, the Middle East and India import more to make special food and cakes for the Muslim Ramadan and Hindu Diwali festivals in November.

Overall volume in palm oil futures totalled 7,406 lots of 25 tonnes each, compared with Monday's 7,964 lots. 

October Chicago soyoil futures <0#ZL:> -- conducted during Asian trading hours -- rose 0.26 cent to 22.98 cents per lb, extending Monday's 0.76 cent gain.

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

($1=3.7690 ringgit)

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

Winnipeg Commodity Exchange canola futures slipped lower on Tuesday on increased farmer selling, improved harvest weather, the strong Canadian

dollar and weak U.S. soy, traders said.

November canola <RSX5> settled $1.20 per tonne lower at $257.70 and January <RSF6> down $1.90 at $265.70.

Canola volumes were estimated at 4,705 contracts, down from a total of 5,994 on Monday.

Crushers were noted buyers, and scale-down Japanese buying provided some support at the close.

But traders were expecting farmer sales to increase as harvest gets rolling this week with mainly clear weather forecast by Environment Canada.

"Everybody's getting hedges," a trader said. "I don't think anyone wants to be long this week."

There were rumors of new exporter interest in canola, but the strong Canadian dollar and shipping delays of the new crop were working to discourage business, traders said.

"Everything gets backed up," a canola trader said. "It's being delayed."

The specter of renewed fund selling if November canola breaks through contract lows at $255.20 per tonne also kept buyers wary.

Some traders saw funds as small net sellers on Tuesday. The net fund short position was estimated between 4,000 and 6,000 contracts.

Provincial crop reports confirmed harvest delays. In Saskatchewan, canola harvest was 29 percent complete compared with 25 percent a week ago and behind the five-year average of 53 percent.

Alberta's canola harvest was only 5 percent complete.

($1=$1.17 Canadian)

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