In The News - 31/10/2005

Weaker CBOT soyoil futures and a strong dollar sidelined many buyers on the European vegetable oil market [OILS/E] on Monday and business was restricted to light covering in palm and rapeoil, market sources said.

"There was a little trade in palm ahead of public holidays in Asia the rest of the week. The market lacked clear leads to get really going," one broker said.

At 1655 GMT CBOT soyoil futures <0#3BO:> were 0.31 to 0.21 cents per lb down from Friday.

Palm oil was offered around $2.50 up after Malaysian palm oil futures <0#KPO:> closed 14 to eight ringgit per tonne up on short covering and friendly palm oil exports for October.

The Malaysian palm oil futures market will be closed on Tuesday, Thursday and Friday.

December delivery palm olein changed hands at $410 a tonne fob Malaysia. October shipment crude palm oil traded at $455 a tonne cif Europe, Jan/March traded $2.50 up at $450 and July/Sept fetched $460 a tonne cif.

EU soyoil was offered up to eight euros down on the back of the weaker CBOT soyoil contracts and EU rapeoil was quoted up to five euros higher on the back of a strong dollar after Feb/April traded at 613 euros per tonne fob exmill and 620 euros was paid for both May/July and Nov/Jan.

Coconut oil was quoted slightly down and palmkernel oil a touch firmer, but buyers showed little interest and no trades were reported, dealers said.

Malaysia's crude palm oil futures ended firmer on Monday on short covering, but it could be under pressure when it re-opens on Wednesday after India decided to raise the base import prices of palm oils, dealers said.

The market will be closed on Tuesday, Thursday and Friday for the Hindu Diwali and Muslim Eid al-Fitr Festivals.

India, the world's leading edible oil importer,  ma y raised base import prices of palm oils marginally on Monday and cut the base price of soyoil slightly.

The base import price of crude palm oil, imported mainly from Malaysia and Indonesia, was raised to $434 a tonne from $426, making it $8 a tonne more expensive to import crude palm oil into India.

"The news is expected to have a minimum impact on the market. The market is expected to open slightly lower on Wednesday," said one Malaysian dealer in Kuala Lumpur.

India buys nearly half its annual needs of around 11 million tonnes in the form of palm oils from Malaysia and Indonesia and soft oils from Argentina and Brazil.

It fixes base prices to prevent importers from under-invoicing the products and paying lower taxes.

The benchmark third-month contract, January <KPOF6>, ended up 14 ringgit at 1,445 ringgit a tonne ($390.5) on Monday.

"Today, the market was quite firm, exports are quite good. There was a bit of short covering during the last hour," said one dealer.

Other traded months settled up 8 to 14 ringgit <0#KPO:>.

Overall volume was 2,531 lots of 25 tonnes each, compared with 1,581 lots on Friday.

Dealers said cargo surveyor Societe Generale de Surveillance's estimate of a 2.5 percent growth in Malaysian palm oil exports for October excited the market.

"Exports figures are supportive. This is friendly above expectations," said another dealer.

SGS, the main independent tracker of Malaysian palm oil shipments, estimates Malaysian exports of oil palm products for October to have risen 2.5 percent to 1,239,339 tonnes from the 1,209,350 tonnes tracked for September.

Soybean futures at the Chicago Board of Trade rose more than 10 cents per bushel on Tuesday on a technical rebound after falling to a 2-1/2 week low on Monday, traders said.

Firm U.S. cash markets were also supportive as farmers held freshly harvested soybeans, hoping prices would trend higher as the market has been trapped within recent trading ranges.

"What we're doing is trying to pry soybeans away from the producer," said Don Roose, analyst with U.S. Commodities in West Des Moines, Iowa.

"We're having a hard time with that -- because there's no LDP (loan deficiency payment) and his marketing choice is to take a (government) loan out and hold. That is forcing the processors, the end users, to bid up for basis beans and causing a firmer tone to the market," Roose said.

November soybeans <SX5> closed 9-3/4 cents higher at $5.74-1/2 per bushel, while January <SF6> was up 10-1/2 at $5.86-1/2. Buying in January escalated when it went through its 20-day moving average of $5.86-1/2.

The market was higher despite fears about reduced soybean and soymeal demand due to the spread of bird flu in Asia and Europe and expectations that the USDA will lift its U.S. soy stocks estimate in its Nov. 10 crop report. The expected increase reflects a lagging export pace from a year ago, along with prospects that the U.S. soybean harvest is bigger than    last month's projections had it.

Brokerage firm FC Stone said late Tuesday it pegged the U.S. soy crop at 3.064 billion bushels, compared to USDA's October estimate for 2.967 billion.

The U.S. soy harvest was nearing completion. USDA said late Monday that 92 percent of the U.S. soybean crop was harvested, up from 87 percent last week and above the five-year average of 86 percent.

Meteorlogix weather on Tuesday said wet weather may slow the tail-end of harvest in the eastern Midwest later this week.

U.S. cash basis markets were firm, underpinned by slowed country sales as farmers want higher prices for this year's harvest. Processors hiked their spot basis bids as much as 15 cents this week, trying to stir some sales.

Even so, CBOT prices were more attractive, triggering another round of heavy deliveries, 1,151 lots, against the November contract on Tuesday.

However, there was some commercial stopping, with the Term Commodities house account taking 407 lots.

Soy registrations with the CBOT increased to 1,572 lots from the previous 1,132.

There was generally satisfactory crop weather in South America, allowing for farmers to plant soybeans.

Overnight export business featured Taiwan setting a tender on Wednesday to buy 40,000 to 60,000 tonnes of U.S. soybeans.

The soy products closed firm, following soybeans. Soymeal saw an added boost from chart-based buying by funds and late meal/oil spreading, floor traders said. CBOT December soymeal <SMZ5> was up $3.80 at $173.50 per ton, with the deferreds up $2.90 to $4.20.

CBOT December soyoil <BOZ5> closed 0.16 cent per lb higher at 23.02 cents, with the back months 0.11 to 0.26 firmer.

The Nov/Dec crush settled 0.37 cent per lb higher at 60.42 cents and the Jan crush was 2.14 cents firmer at 53.59 cents.

Malaysian palm oil markets were closed for holiday.

Volume was moderate. In soybeans, an estimated 69,750 futures and 10,635 options traded. Estimated soymeal volume was 27,132 futures and 2,135 options. Soyoil trade was pegged at 25,054 futures and 4,053 options.

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