In The News - 28/09/2005

Malaysian crude palm oil futures closed up marginally on Tuesday, reversing early losses as players bet on better exports for September in a market

struggling to stay above 1,450 ringgit a tonne.

The benchmark third-month December <KPOZ5> contract on Bursa Malaysia Derivatives closed up at 1,458 ringgit ($386.84) a tonne. It had risen as much as 16 ringgit in the afternoon to a high of 1,471.

The low for the day was 1,446 ringgit, indicating that some players were still not comfortable with the market having broken the 1,450 resistance on Monday.

"Speculators are trying to hit the next resistance of 1,480 but I don't think we can sustain that yet," said a dealer.

Other traded contracts closed up 2 to 9 ringgit <0#KPO:>.

Volume totalled 6,735 lots of 25 tonnes each, more than 5 times the level seen in the morning.

"I think we'll see this pattern of phenomenal afternoon volumes in the next few days until Friday's export numbers," said another dealer.

Market bulls are betting on strong exports of palm oil beginning this month as Pakistan, the Middle East and India import more products to prepare for the Muslim Ramadan and Hindu Diwali festivals in October/November.

The December futures contract rose 27 ringgit on Monday, helped by stronger export estimates for the first 25 days of September.

Societe Generale de Surveillance (SGS), the main tracker of palm oil shipments watched by the market, on Monday estimated exports for Sept. 1 to 25 at at 1,021,894 tonnes, up 12.4 percent from what it tracked for Aug. 1 to 25.

SGS is due to estimate on Friday shipments for the whole of September.

($1=3.7690 ringgit)

Soybean futures on the Chicago Board of Trade fell to a seven-month low on Tuesday on increasing Midwest supplies as harvest moves forward, traders said.

"The crop is getting bigger ... the market is seeing higher yield potential and that's what's weighing on the market," said Randy Mittelstaedt, analyst with R.J. O'Brien in Chicago.

November soybeans <SX5> closed 10 cents lower at $5.57-1/2 per bushel, breaking $5.60 support. The deferreds settled 5 to 10 cents lower.

Clear skies this week across the U.S. crop belt should promote harvesting. There was a chance of a few light showers on Wednesday, with dry weather Thursday through the weekend, a private forecaster said Tuesday.

"There should be improved harvest this week, after the rains slowed the harvest over the weekend," said Meteorlogix forecaster Joel Burgio.

The U.S. Agriculture Department late Monday said 19 percent of the U.S. soy crop had been harvested, which exceeded the 13 percent traders expected. 

This year's harvest pace was ahead of the five-year average of 14 percent for the third week in September.

USDA also raised its condition ratings for the U.S. soybean crop by 2 percentage points.

Reports continued of good harvest yields, and there was spillover weakness from lower crude oil prices, traders said.

Exports were quiet overnight. But there was talk this week of fresh interest by China in U.S. soybeans, with the top global soy buyer said to be purchasing another one or two cargoes.

Midwest cash basis bids for soybeans early Tuesday were steady to weak on harvest pressure, cash dealers said. Softer river bids were in response to higher barge freight.

The soy product markets were also weaker, following the moves in soybeans. October soymeal <SMV5> was $1.30 lower at $168.40 per ton, with deferreds down $1.60 to up 60 cents.

Soyoil also took pressure from the weakness in the energy markets, traders said. October soybean oil <BOV5> was down 0.58 cent at 22.09 cents per lb., with deferreds 0.55 to 0.67 cent weaker.

CBOT soyoil futures have been tracking crude oil prices the past week amid increasing demand for biodiesel fuel, which is made from soybean oil.

Malaysian palm oil futures closed firm overnight on outlooks for improving export demand for September, traders said.

Commodity funds sold 5,000 soybean lots, 1,000 soymeal contracts, 5,000 soybean oil lots. Commercials were net buyers of 3,000 soyoil lots.

Estimated soybean trade was 60,609 futures and 25,429 options. Soyoil volume was large estimated at 42,249 futures and 3,193 options. Soymeal trade was pegged at 34,944 futures and 2,639 options.

(All prices in Canadian dollars unless noted)

Canola futures on the Winnipeg Commodity Exchange closed at new contract lows on Tuesday on heavy farmer hedges and grain company selling as well as fund selling, traders said.

Canola settled $3.80 to $5 per tonne lower, with November <RSX5> down $3.90 at $253.30 and January <RSF6> down $3.80 at $262.20.

Canola volumes were estimated at 10,101 contracts, up from 6,466 on Monday.

"Huge, huge, huge farmer selling," a canola trader said. 

"The farmer is pulling the trigger here."

Saskatchewan's weekly crop report showed the canola harvest as 52 percent complete, up from 29 percent last week, but below the five-year average of 63 percent.

Environment Canada forecast mostly sunny skies for the Canadian Prairies this week. Traders expected harvest to advance rapidly.

The market also saw pressure from weak Chicago Board of Trade soybean and soybean oil futures.

November canola broke through contract lows of $255.20 per tonne, sparking fund selling.

The net fund short position was estimated between 4,000 to 5,500 contracts, traders said.

Japanese buying and speculative profit taking provided scale-down support, traders said.

Almost 2,400 November/January spread traded between $8.60 and $9 and 182 January/March traded between $6.60 and $7.20.

($1=$1.18 Canadian)

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