In The News - 16/11/2005

Malaysian crude palm oil futures ended down for a third straight day on Wednesday as prices of rival U.S. soyoil, which often guide the local market,

remained weak.

Buyers also shrugged off India's move to trim base import prices of edible oils, saying the cuts did not offer major advantages to palm oil.

"It's a few dollars of difference here and there," said a trader, referring to the new base prices announced by New Delhi on Wednesday. (For story on India's new edible oils duty structure, please double click on [ID:nDEL034209]).

At the close, the new benchmark third-month February contract <KPOG6> on Bursa Malaysia Derivatives showed 7-ringgit loss to settle at 1,415 ringgit ($374.44) a tonne. It fell as much as 12 ringgit earlier to an intraday low of 1,410.

Other traded months closed down 5 to 11 ringgit <0#KPO:>. 

Overall volume was 5,543 lots of 25 tonnes each, heavier than Tuesday's 4,855 lots. The market can easily surpass 6,000 lots on a busy day.

Dealers attributed the bearish streak to weakness in Chicago Board of Trade's soyoil.

"The CBOT is down and aside from that, there isn't much for people to follow," said a trader.

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

CBOT soyoil closed down fell on Tuesday on thin leads and remained depressed in Wednesday's electronic session, conducted during Asian business hours <0#ZL:>.

Palm oil dealers said there was little cheer in their market after the poor performance of exports this month due to long holidays for religious festivities.

Cargo surveyor Societe Generale de Surveillance (SGS) said on Monday that Malaysian exports of oil palm products for Nov. 1-15 were estimated to have fallen 16.7 percent from figures tracked for Oct. 1-15.

It had earlier estimated a 40 percent drop in shipments for Nov. 1-10 due to a near week-long break for the Hindu Diwali and Muslim Eid al-Fitr festivals.

Chicago Board of Trade soybean futures dived on Wednesday amid renewed concerns about the possibility of reduced feed demand due to the spread of bird flu in Asia, traders said.

That sparked a wave of technical sales, with the market falling below its 20-, 30- and 50-day moving averages.

January soy <SF6> closed 15-1/2 cents per bushel lower at $5.76-3/4, with the deferreds 10 to 15-1/4 cents down.

"The fear is it's getting worse in China and people will stop eating chicken. That would cut meal consumption and cut into our bean exports," said Dan Cekander, analyst with Fimat Futures.

Officials in Beijing on Wednesday confirmed three cases of human bird flu in China, with at least one person dying from the H5N1 virus.

There also was floor talk that more people were affected by bird flu in China than what is currently reported from that country.

Soymeal prices were also weak, closing $4.20 to $6.90 per ton lower. December <SMZ5> soymeal was down $6.80 at $173.40.

Additionally, the soymeal market was poised for a technical sell-off, after rising to over $180 this week.

Commodity funds sold about 8,000 soybean contracts, 4,000 soymeal and 1,500 soyoil, traders said.

Futures were lower despite firm U.S. cash soybean markets.

In exports, there was talk that China bought old-crop Argentine soybeans for January delivery and was interested in U.S. soybeans, traders said.

Traders have turned their attention to South American soybean growing conditions now that the U.S. soy crop has been put away.

Argentina was dry on Tuesday and was expected to stay clear until Thursday when showers move through the crop regions, said Meteorlogix weather service.

Conditions should turn dry over the weekend. Argentina has been dry this growing season and was benefiting from this week's rains, CBOT traders said.

In Brazil, the weather was dry on Tuesday and was forecast to remain clear through Wednesday when rains move through southern and central Brazil Thursday through Saturday.

Argentina fine-tuned its forecast for the 2005/06 soybean area on Wednesday, putting it at 15.1 million hectares compared with 15.0 million to 15.3 million last month.

There were no deliveries posted against the November contract early Wednesday, the last day to make deliveries against the expired contract.

Midwest cash basis bids for soybeans firmed on Wednesday amid processor demand and limited farmer sales, dealers said.

CBOT soyoil futures were the strongest of the complex, trying to recover from their recent drop linked to large U.S. soyoil stocks. December soyoil <BOZ5> closed 0.15 cent per lb lower at 22.19 cents, with deferreds down 0.04 to 0.10 cent.

Soyoil got a lift from the strength in the energy markets, as crude oil closed nearly $1 per barrel higher. Since soyoil is the primary feedstock in U.S. biodiesel production, soyoil has   been tracking the energy markets this fall.

Malaysian palm oil futures closed weak overnight, sagging for the third straight day as prices of rival U.S. soyoil, which often guide the local market, remained weak, traders said.

Volume was moderate in soybeans and heavier than usual in soymeal and soyoil. An estimated 85,156 soy futures and 22,886 options traded. Soymeal trade was pegged at 44,065 futures and 2,511 options. Soyoil volume was estimated at 31,586 futures and 4,759 options.

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