In The News - 23/09/2005

Malaysian palmoil closed up on Thursday, reversing losses from the previous day as prices of rival U.S. soyoil surged.

The market was also bolstered by expectations that export estimates for Sept. 1-25 would be around 10 percent higher than shipments for Aug. 1-25, although concerns persisted over high output and stocks.

The benchmark third-month December <KPOZ5> palm oil contract on Bursa Malaysia Derivatives rose eight ringgit to 1,432 ringgit ($379.94) a tonne after trading a range of 1,424/1,436.

It fell two ringgit on Wednesday as investors cut back positions ahead of next week's export numbers. 

"I think we'll stay above 1,420 in the near term, until all the exports and production numbers for this month are out," a futures trader said.

A Reuters survey on Thursday of five leading plantation houses in Malaysia showed that a new record for palm oil production could be expected this month, with output about 5.7 percent above August.

Stocks of crude and refined palm oil left in the market at end-September could be 6.5 percent higher than the volume for end-August, the survey's respondents said [ID:nKLR63910].

The broader futures market closed up 4-18 ringgit <0#KPO:>. Overall trading volume was 6,295 lots of 25 tonnes each, down from Wednesday's total of 8,158 lots.

The market typically sees 6,000 lots or more on a busy day.

Two cargo surveyors will issue on Monday export estimates of Malaysian palm oil for the first 25 days of September.

Societe Generale de Surveillance, the most closely watched of the two, said earlier this week it had noted a 9 percent rise in Sept. 1-20 shipments from Aug. 1-20.

September usually marks the start of one the busiest periods for Malaysian palm oil exports as Pakistan, the Middle East and India import more products to prepare for the Muslim Ramadan and Hindu Diwali festivals in November.

Soyoil futures on the Chicago Board of Trade surged on Wednesday on indications of rising demand for biodiesel.     CBOT's October soyoil ended Wednesday up 0.47 cent per lb at 22.92 cents, while December rose 0.51 cent to 23.21 cents. The prices were virtually unchanged in Thursday's electronic CBOT trade, conducted during Asian hours <0#ZL:>

($1=3.7690 ringgit)

Soybean futures at the Chicago Board of Trade rose on Thursday following the moves in soyoil, which tracked the strength in energy markets on fears that Gulf of Mexico refineries would be crippled by Hurricane Rita, traders said.

Soybean oil has been tracking the energy markets -- acting more like an energy product than a food this week -- amid rising demand for biodiesel. About 90 percent of U.S. biodiesel is made from soybean oil.

"We sagged late when they downgraded the hurricane and crude oil broke," one CBOT floor broker said.

Hurricane Rita weakened to a Category 4 storm on Thursday. The National Hurricane Center forecast that the storm should strike the Houston, Texas area early Saturday.

November soybeans <SX5> closed 2-3/4 cents per bushel higher at $5.80-1/2, down from its top of $5.85. The deferreds settled 2 to 4 cents firmer.

October soyoil <BOV5> settled 0.40 cent higher at 23.32 cents per lb, rising 1.19 cent in the past week. The deferreds were up 0.20 to 0.36 cent. Funds bought about 3,000-4,000 lots each of soyoil and soybean, traders said.

"I think we took our focus off the real issue which is the size of the crop. We're having a little bit of a short-covering bounce as eyes switched to what's happening with Hurricane Rita," said Don Roose, analyst with U.S. Commodities.

Weekly export sales data was supportive, above expectations. The U.S. Agriculture Department reported that U.S. export sales of soy last week were 752,000 tonnes, above estimates for 400,000 to 700,000 tonnes. The top amount of 233,000 tonnes was slotted for unknown destinations. But China, the world's top soy buyer, took 223,000 tonnes, a supportive sign confirming recent industry talk.

USDA also confirmed early Thursday the sale of 120,000 tonnes of soybeans to China in the past day.

Midwest soybean bids were steady to weaker at interior points early Thursday amid prospects that supplies would grow as harvest progresses. But river bids surged due to a drop in barge freight costs.

Harvest was moving along in the Midwest on Thursday with reports of better-than-expected yields continuing this week. Soybean yields of 40 to 50 bushels per acre in Midwest fields were common, traders and cash dealers said.

But rain over the next five days could stall harvest, Meteorlogix weather service said on Thursday.

The soymeal market remains the weakest market of the complex as soft U.S. cash soymeal markets loom over prices.

October soymeal <SMV5> closed 50 cents lower at $172.10 per ton, with deferreds down 40 to 90 cents.

There was a neutral reaction to U.S. weekly sales among traders for soymeal and soyoil as they came within expectations.

USDA reported U.S. soymeal export sales from last week at 94,200 tonnes (old-crop and new-crop combined). Trade estimates were for 75,000 to 150,000 tonnes.

U.S. weekly soyoil exports sales last week totaled 5,900 tonnes (old-crop and new-crop combined), within the range of estimates for zero to 10,000 tonnes.

Malaysian palm oil futures closed firm overnight, following rival U.S. soyoil.

Volume was light to moderate in the complex. In soybeans, an estimated 39,153 futures and 16,177 options traded. Estimated soymeal trade was 21,216 futures and 2,605 options. Soyoil volume was pegged at 27,507 futures and 8,420 options.

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

Winnipeg Commodity Exchange canola futures settled higher on Thursday on crusher and exporter buying and support from allied U.S. futures,

traders said.

Canola closed $1.50 to $4.60 per tonne higher, with November canola <RSX5> up $2.80 at $261.20 and January <RSF6> up $1.50 at $269.50.

Canola volumes were estimated at 5,039 contracts, down from a total of 7,299 on Wednesday.

An estimated 856 November/January spread traded between $8.60 and $8.90, with 268 November/March between $15.80 and $16.00.

Japanese and Australian short covering was seen at the opening. Exporters were noted buyers at the close, which traders speculated could be related to new business.

Crusher buying continued because of strong Chicago Board of Trade soybean oil prices, traders said.

Hurricane Rita and rising demand for biodiesel continued to buoy soyoil, with December <BOZ5> closing up 0.35 U.S. cent per pound on Thursday at 23.56 U.S. cents per pound.

Funds were also light buyers of canola during the session.

Farmer selling picked up as November canola rose above $260.00 per tonne, traders said.

Environment Canada said much of Saskatchewan was hit by frost overnight, but the cool weather did not damage mature crops, traders said.

Rains were expected in Alberta and Saskatchewan on Thursday and Friday, followed by clear weather until Tuesday, Environment Canada said.

Commission house and speculative buying supported feed wheat futures, with shorts taking profits and scale-up hedges entering the deferred contracts, traders said.

($1=$1.17 Canadian)

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