In The News - 28/10/2005

Malaysian crude palm oil futures ended down on Friday, with traders expecting little business in the week ahead due to holidays.

Volume on the Bursa Malaysia Derivatives was light at 1,581 lots of 25 tonnes each, compared with Thursday's hefty trade of 6,099 lots.

The benchmark third-month contract, January <KPOF6>, ended down 4 ringgit at 1,431 ringgit a tonne ($379.58), after moving in a tight 8-ringgit band.

Other traded months closed down 1 to up 2 ringgit <0#KPO:>.

"There was one late buying by people scared if they did not cover right away, they might miss out the whole of next week from any rally in soyoil," a trader said. "But that wasn't enough to push up the market."

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

Soyoil prices on the Chicago Board of Trade have been volatile lately as the commodity is increasingly viewed as an energy product for biofuel, rather than as a traditional source of food.

The palm oil market will be closed for three days next week -- Tuesday, Thursday and Friday -- to mark the Hindu Diwali and Muslim Eid al-Fitr Festivals.

Although trade is supposed to go on as normal on Monday and Wednesday, dealers expect little activity.

"It'll practically be a dead market those two days with so many people holidaying," said another trader. "That's why many have decided to close positions today."

Soybean futures at the Chicago Board of Trade slipped on Friday on a technical breakdown, with the November contract falling below a key support level at $5.66-1/2, traders said.

Most of the trade came from spreading as firms rolled November positions before first notice day on Monday. Concerns about global feed demand amid the spread of bird flu remain bearish along with a lagging export pace for U.S. soybeans.

"Unless you were trading wheat or bean spreading, you should have stayed home," said one CBOT floor broker.

November soy <SX5> closed 6 cents per bushel lower at $5.65. January <SF6> was down 6 at $5.77-1/2.

November deliveries were expected to be large, likely closer to 1,500 or 2,000 since the Nov/Jan spread closed at 12-1/2 cents. If the spread was closer to 13 or 14 cents, deliveries were seen lighter since the market would have paid firms to carry their positions forward.

The $5.66-1/2 level in November soybeans was key support, after the market dipped to that level on Monday -- filling a chart gap leftover from the Oct. 12 crop report.

Funds sold about 5,000 soybeans. Refco and UBS Warburg each sold 800 January, traders said.

Some late pre-weekend hedge pressure surfaced late as this would be the last big weekend for the U.S. soybean harvest, traders said.

Midwest soybean basis bids for soy firmed early Friday as harvest was slowing and processors tried to source enough beans to replace their crush.

Taiwan passed on an export tender for 40,000 to 60,000 tonnes of U.S. soybeans overnight because prices were too high.

Also bearish was generally satisfactory weather for planting soybeans in South America. There were some concerns about rain in southern Brazil slowing planting but it was still early in the season. Northern Brazil was in need of rain.

But a shift toward more rain in the north and less rain in the south during the next five to seven days will improve planting conditions, said Meteorlogix weather service on Friday.

The soy products were lower following soybeans. December soymeal <SMZ5> was $1.70 per ton weaker at $168.80, with the deferreds 50 cents to $1.70 lower. December soyoil <BOZ5> was 0.05 cent weaker at 23.33 per lb, with back months 0.06 to 0.12 cent down. Funds sold about 1,500 each of soyoil and soymeal contracts, while commercials bought about 2,000 soyoil.

CBOT soymeal retreated from Thursday's climb which was sparked by tighter-than-expected U.S. soymeal stocks. South Korea's purchase of 110,000 tonnes of South American soymeal offered little support. Concerns remain about the possibility of reduced meal demand amid the spread of the deadly bird flu were bearish.

Steady to softer crude oil prices early in the session were bearish. CBOT soybean oil has been tracking the energy markets recently due to the outlooks that demand for soy-based biodiesel will rise amid a push for renewable fuels.

Malaysian palm oil futures closed mostly weak overnight, sagging amid little business in the week ahead due to holidays, traders in Kuala Lumpur said.

Volume was heavy. In soybeans, an estimated 94,063 futures and 10,874 options traded. Soymeal trade was seen at 20,881 futures and 2,278 options. Estimated soyoil volume was 23,106 futures and 3,336 options.

Back

For More Inquiries:
Our e-mail : [email protected]