In The News - 10/11/2005

Malaysia's crude palm oil futures rose in heavy volume on Thursday as players covered short

positions, dealers said.

The benchmark third-month January crude palm oil contract <KPOF6> on Bursa Malaysia Derivatives settled up 8 ringgit at

1,435 ringgit ($380.6) a tonne after touching an intra day low of 1,419 ringgit.

"The market had a surprise move today. Everything was bearish, but the market closed up, basically on short covering,"

said a Malaysian dealer in Kuala Lumpur.

Cargo surveyor Intertek Testing Services (ITS) said exports of Malaysian oil palm products between Nov. 1 and 10 were 262,909

tonnes, down 44 percent from the 473,089 tonnes shipped between Oct. 1 and 10.

Another surveyor, Societe Generale de Surveillace (SGS), the main independent tracker of Malaysian palm oil shipments, said exports of Malaysian oil palm products from Nov. 1 to 10 were estimated to have fallen 39.8 percent to 285,482 tonnes from the 473,891 tonnes tracked for Oct. 1-10.

Other traded months settled up 3 ringgit to 12 ringgit <0#KPO:>. Overall volume was heavy at 5,885 lots of 25 tonnes each. 

Dealers said they expected the market to move in a narrow range when it opened on Friday, with the immediate new resistance at 1,450 ringgit and support at 1,420 ringgit.

Chicago Board of Trade soybean futures closed lower Thursday on USDA's bigger U.S. 2005/06 soy crop estimates released before the open, but prices recovered during the session and ended near the highs, traders said.

November soybeans <SX5> closed 1-1/4 cents per bushel weaker at $5.77 and January <SF6> was 1 lower at $5.87-1/2, after falling 10-1/2 cents to $5.78 early.

The market rebounded late in the session amid talk of good U.S. soybean export business this week and the technical strength in the soymeal pit.

There was talk that China bought 4-6 cargoes of U.S. soybeans overnight, bringing this week's total to 8-10 cargoes bought, traders said.

In soymeal, Tenco was noted buying 1,000 December soymeal late, driving the market to higher close in the nearby months.

December soymeal <SMZ5> settled $1.20 higher at $175.50 per ton, with the deferreds $1 higher to down 10 cents.

Soyoil was the weakest of the complex, pressured by USDA larger stock estimates and prospects that this year's U.S. soybean crop was yielding high oils. December soyoil <BOZ5> closed 0.19 cent weaker at 22.77 cents per lb, with the deferreds down 0.17 to 0.24.

Early pressure stemmed from big USDA crop numbers and disappointing weekly export sales for soybeans.

The U.S. Agriculture Department on Thursday estimated this year's U.S. soybean crop at 3.043 billion bushels, compared with 2.967 billion forecast in October.

While the number was bearish, traders had been expecting a big number along with a bump up in stocks due to the bigger production estimate. That helped limit the early sell-off, traders said.

USDA raised its U.S. 2005/06 soy stocks estimate to 350 million bushels, up from 260 million last month.

"I didn't think it was any big surprise at all," said Anne Frick, oilseed analyst with Prudential Securities.

"We have big supplies and we knew that. I thought the revision downward in the USDA's Brazilian crop estimate was expected. The only surprise I thought was how aggressive they were on raising crush and reducing exports," she said.

The Brazilian soy crop was cut 1.5 million tonnes. The U.S. crush was raised by 25 million bushels and soy exports were cut 40 million.

USDA Thursday said export sales of U.S. soy last week totaled 580,100 tonnes. That was below estimates for 600,000 to 800,000 tonnes.

Midwest basis bids were firm Thursday as farmers were reluctant to sell into a lower market.

There were heavy deliveries on the November contract on Thursday of 387 lots, but they were met by commercial stopping. A Tenco customer issued 255 lots and a commercial was the key stopper with the Term Commodities taking 242 lots. An R.J. O'Brien customer stopped 143.

CBOT soy registrations were unchanged at 1,790 lots.

Weekly export sales for soymeal were disappointing and supportive for soyoil, traders said.

USDA reported that U.S. soymeal export sales last week totaled 79,800 tonnes, below trade estimates for 100,000 to 150,000 tonnes. In soyoil, export sales totaled 41,200 tonnes, compared with estimates for 2,000 to 7,000 tonnes.

USDA stocks data for soymeal was market-neutral, left unchanged at 250,000 tonnes. But soyoil stocks data was bearish as the government bumped up its U.S. soyoil stocks for the 2005/06 crop year to 1.891 billion lbs, from 1.641 billion last month.

Malaysian palm oil futures closed firm overnight as players covered short positions, traders said.

Commodity funds sold about 2,000 soybean contracts; 2,000-3,000 soyoil and 500 to 1,000 soymeal, traders said. Commercials were buyers of roughly 1,500 soyoil contracts.

Trade was moderate in soybeans and more active than usual in soymeal and soyoil. Estimated soybean trade was 60,921 futures and 18,211 options. Soymeal volume was pegged at 29,260 futures and 2,179 options. In soyoil, an estimated 33,846 futures and 4,048 options traded.

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