In The News - 07/11/2005

Malaysia's crude palm oil futures ended softer in thin trading at midday on Monday as few players

participated, dealers said.

The benchmark third-month January crude palm oil contract <KPOF6> on Bursa Malaysia Derivatives was down 6 ringgit at 1,434

ringgit a tonne ($380.37) at the midday break after trading as high as 1,442 ringgit.

"The market eased down slightly. A lot of people were still not participating," said one Malaysian dealer in Kuala Lumpur.

December and February fell 7 ringgit <0#KPO:>. No other months were traded.

Overall volume was extremely thin at 400 lots of 25 tonnes each. The market trades 6,000 lots or more on a busy day.

"After long holidays last week, there is no news, no report to lift the market," said another dealer.

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

Dealers said they expected the market to move in a narrow range in the coming days in the absence of any other guides.

Dealers pegged the immediate new resistance at 1,470 ringgit, with support at 1,420 ringgit.

Soybean futures at the Chicago Board of Trade closed lower on Monday with the market pressured by the harvest of a big U.S. soybean crop and bearish technicals, traders said.

CBOT soy closed 3-1/2 to 9 cents per bushel lower, with November <SX5> down 9 at $5.71-1/2 per bushel. January <SF5> was down 9 at $5.83.

Volume was estimated by the exchange at 44,621 futures and 14,754 options.

"The big issue in here is the idea we're going to get a bigger crop and we'll probably have a cut in usage, exports specifically, and the carryout could get bigger in this next report," said Dale Gustafson, analyst for Citigroup.

The U.S. Agriculture Department will release its November crop report Thursday. Traders are expecting this year's output to be near 3 billion bushels, which would be the second-largest U.S. soybean crop on record.

Mostly satisfactory crop weather in South America also was weighing on prices, traders said.

Traders said selling accelerated when the January contract opened below key support at the $5.90 per bushel 50-day moving average.

Exports were quiet over the weekend. Traders said there is almost daily talk that China is seeking or buying U.S. soy.

USDA on Monday said 33.1 million bushels of U.S. soy were inspected for export last week, below the inspections of 41.4 million the previous week.

Deliveries on the November contract totaled 495 lots and there was scattered stopping of the soy. Registrations with the CBOT increased to 1,790 lots from 1,484.

Harvest weather has become less of a market factor because the U.S. harvest is virtually complete. Meteorlogix weather service it would be mostly dry in the western Midwest this week, with a few light showers expected in the east.

Meteorlogix also said very little rainfall was expected in Brazilian crop areas over the next seven days and mostly dry weather was expected in Argentina. Some stress on planted soy is beginning to surface in northern Brazil and additional rainfall is needed in Argentina, Meteorlogix said.

Cash basis bids for soybeans in the Midwest were firm and farmer selling remained slow.

Friday's CFTC Commitments of Traders report for futures and options combined showed that, as of last Tuesday, large speculators were long 48,508 lots and short 43,238. The number of long positions increased 4,080 lots from the previous report and the number of short positions increased 1,197.

Technical support in the January contract at $5.90 per bushel was broken, driving the contract to a session low of $5.82-1/2. Resistance was at $5.94-1/2.

Soymeal futures closed unchanged to $2.40 per ton lower, with December <SMZ5> down $2.10 at $174.10 per ton.

Soymeal volume was estimated at 19,930 futures and 1,514 options.

Traders said soymeal was pressured by the drop in soybean futures.

Friday's CFTC Commitments of Traders report for futures and options combined showed that, as of last Tuesday, large speculators were long 16,464 lots and short 22,630. The number of long positions increased 328 lots from the previous report and the number of short positions increased 1,040.

Soyoil was down 0.28 to 0.30 cent per lb lower, with December <BOZ5> down 0.27 at 22.67 cents per lb.

Soyoil volume was estimated at 23,124 futures and 3,395 options.

Falling soybean futures weighed on soyoil as did weak crude oil prices. Soyoil has been getting some direction from the volatile crude oil market since soyoil is a key ingredient in the growing biodiesel industry.

Malaysian palm oil futures closed lower overnight. Traders in Kuala Lumpur said the decline reflected a lack of participants as the market reopened after a long holiday break.

Friday's CFTC Commitments of Traders report for futures and options combined showed that, as of last Tuesday, large speculators were long 27,879 lots and short 12,649. The number of long positions declined 2,978 lots from the previous report and the number of short positions increased 4,393.

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