In The News - 17/11/2005

Malaysian crude palm oil futures recovered on Thursday after a three-day slide, but dealers said the market might still slip below key support in the coming days unless soyoil rebounded.

The third-month crude palm oil contract on Bursa Malaysia Derivatives, February <KPOG6>, closed up 2 ringgit at 1,417 ringgit ($374.94) a tonne.

The benchmark contract fell to a low of 1,403 ringgit in morning trade, near key support at 1,400.

"We probably closed higher because some people are setting the market up for profit-taking," said one trader.

"I don't think we can hold above 1,400 for long if the losses in soyoil keep up," another dealer said.

Soyoil futures on the Chicago Board of Trade have been down lately due to large U.S. stocks of the commodity.

At Wednesday's close, December CBOT soyoil lost 0.15 cent to close at 22.19 cents a lb. It remained weak in Thursday's electronic trade <0#ZL:>, conducted during Asian business hours.

Other traded months in palm oil closed between 14 ringgit down and 2 ringgit up <0#KPO:>.

Overall volume was 5,402 lots of 25 tonnes each, little changed to Wednesday's 5,543 lots. The market can easily surpass 6,000 lots on a busy day.

Weak soyoil prices aside, the palm oil market has also been weighed down in recent days by the weak performance of exports this month due to long holidays for the Hindu Diwali and Muslim Eid al-Fitr festivals.

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.

SGS had earlier estimated a 40 percent drop in shipments for Nov. 1-10.

The Chicago Board of Trade soybean market closed firm Thursday after a choppy session, trying to recover from Wednesday's fund-led decline on worries about U.S. soybean export demand amid the spread of bird flu in Asia, traders said.

January soybeans <SF6> closed 2-1/2 cents higher at $5.79-1/4 per bushel. The deferreds were mostly higher, up 2 cents to down 1/2 cent.

Commercial buying helped underpin prices as firms took advantage of Wednesday's price break to price soybeans. January soybeans fell nearly 20 cents on Wednesday, slipping below 20-, 30- and 50-day moving averages.

ADM Investor Services bought 300 January and Term Commodities bought 100 March, traders said.

Officials in Beijing on Wednesday confirmed three cases of human bird flu in China, with at least one person dying from the H5N1 virus. An official from the World Health Organization said on Thursday more outbreaks of bird flu in poultry and humans in China were likely in the coming winter months.

U.S. weekly export sales were within trade expectations but continue to lag a year ago, casting a bearish price outlook.

The U.S. Agriculture Department on Thursday said U.S. soybean export sales last week totaled 644,800 tonnes, compared with estimates for 500,000 to 700,000 tonnes. Top global soy buyer China bought more than half with 345,500 tonnes.

Traders have turned their attention to South American weather now that the U.S. harvest is finished.

Argentina was expected to see much-needed rain on Thursday, said Meteorlogix weather service on Thursday. The country was forecast to turn dry Friday through Monday.

Brazil was dry on Wednesday with rains expected to move through central and southern Brazil through Saturday. The rains should help the drier northern areas of Brazil but southern Brazil needs to dry out so farmers can continue planting this year's crop.

Midwest cash basis bids for soybeans were steady on Thursday, underpinned by a lack of farmer sales.

The soy product markets were also up and down, following the moves in soybeans.

December soymeal <SMZ5> closed $1.40 per ton higher at $174.80, with the deferreds $1.80 higher to 60 cents lower.

December soyoil <BOZ5> settled 0.03 cent per lb lower at 22.16 cents, with the deferreds 0.09 to 0.23 cent weaker.

The soymeal market was underpinned by a strong weekly export sales tally and the cancellation of 149 CBOT soymeal registrations late Wednesday -- one indicator of commercial demand for soymeal.

USDA said U.S. soymeal export sales last week totaled 204,700 tonnes, above estimates for 100,000 to 150,000 tonnes.

But weekly U.S. soyoil exports were disappointing, casting a bearish tone to trade. USDA reported soyoil export sales from last week at 900 tonnes, significantly below trade estimates for 2,000 to 7,000 tonnes.

Also weighing on soyoil was a drop in crude oil prices to five-month lows. CBOT soyoil futures have been tracking the energy markets this fall amid an expected increase in soy-based biodiesel production.

Malaysian palm oil futures closed narrowly mixed overnight as palm recovered after a three-day slide. But dealers said the market might still slip below key support in the coming days unless CBOT soyoil rebounds.

Volume was light in soybeans while soymeal and soyoil were moderate amid rolling of December positions before the start of the delivery period at month's end.

In soybeans, an estimated 46,644 futures and 19,255 options traded. Soymeal trade was pegged at 28,085 futures and 3,551 options. Soyoil volume was estimated at 33,841 futures and 4,529 options.

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