MARKET DEVELOPMENT
VEGOILS-Palm Oil Falls to 1-Week Low, Tracks Weak Soyoil
VEGOILS-Palm Oil Falls to 1-Week Low, Tracks Weak Soyoil
02/05/2013 (Reuters) - Malaysian palm oil futures fell to a one-week low on Thursday, tracking losses in overseas soybean oil markets and hurt by expectations of a smaller decline in stocks after cargo surveyor data showed export slowing.
The most active September soybean oil contract on the Dalian Commodities Exchange fell more than 2 percent after resuming trading from a three-day holiday break, triggered by data showing the momentum of China's economic recovery is slowing.
On Thursday, the final HSBC Purchasing Managers' Index dropped to 50.4 in April from March's 51.6, and stood a touch below a flash reading of 50.5, as new export orders fell for the first time this year.
Soyoil is a close competitor with palm and a fall in its prices could wean away demand from palm. China is the world's biggest soy importer.
Weak fundamentals also added pressure on palm oil after cargo surveyors reported lower shipments in April from a month ago, damping hopes for stocks to fall below the key psychological level of 2 million tonnes this month.
"The market is tracking the sharp fall in Dalian soybean oil after reopening. The palm market is rangebound between 2,250 and 2,350 ringgit and if it breaks the support level at 2,250 ringgit, it could go even lower to 2,230 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange had lost 1.2 percent to close at 2,259 ringgit ($741) per tonne, just slightly above its intraday low at 2,258 ringgit, a level last seen on April 23.
Total traded volumes stood at 31,529 lots of 25 tonnes each, compared to the average daily trading volume of 35,000 lots.
Inventory Level Awaited
On Tuesday, cargo surveyor Societe Generale de Surveillance reported a decline of 5.6 percent in April exports on the month, on slowing Chinese demand. Another surveyor, Intertek Testing Services, reported a fall of 4.3 percent.
Market participants now await Malaysian palm stocks and output data due on May 10 for further market direction. Inventory in the world's second-largest producer of the edible oil stood at 2.17 million tonnes in March, easing from February's 2.43 million.
"Investors are looking ahead. Exports are lower, but we heard production is also lower. It's hard to say whether stocks will drop below 2 million tonnes, but most likely it could be just a marginal drop," said the Kuala Lumpur trader.
In other markets, oil held near $100 a barrel on Thursday, pressured by ample supplies and fresh signals of weak global economic growth, which stirred concern about the demand outlook.
In vegetable oil markets, U.S. soyoil for July delivery edged 0.1 percent lower in late Asian trade, weighed down by concerns of a slowing economic recovery in China.
Palm, soy and crude oil prices at 1004 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY3 2250 +1.00 2250 2255 117
MY PALM OIL JUN3 2255 -28.00 2254 2268 3664
MY PALM OIL JUL3 2259 -27.00 2258 2275 13639
CHINA PALM OLEIN SEP3 5834 -162.00 5826 5900 370838
CHINA SOYOIL SEP3 7184 -156.00 7170 7250 644308
CBOT SOY OIL JUL3 48.80 -0.05 48.75 48.99 5100
NYMEX CRUDE JUN3 91.36 +0.33 90.65 91.49 25634
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.05 ringgit)
The most active September soybean oil contract on the Dalian Commodities Exchange fell more than 2 percent after resuming trading from a three-day holiday break, triggered by data showing the momentum of China's economic recovery is slowing.
On Thursday, the final HSBC Purchasing Managers' Index dropped to 50.4 in April from March's 51.6, and stood a touch below a flash reading of 50.5, as new export orders fell for the first time this year.
Soyoil is a close competitor with palm and a fall in its prices could wean away demand from palm. China is the world's biggest soy importer.
Weak fundamentals also added pressure on palm oil after cargo surveyors reported lower shipments in April from a month ago, damping hopes for stocks to fall below the key psychological level of 2 million tonnes this month.
"The market is tracking the sharp fall in Dalian soybean oil after reopening. The palm market is rangebound between 2,250 and 2,350 ringgit and if it breaks the support level at 2,250 ringgit, it could go even lower to 2,230 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange had lost 1.2 percent to close at 2,259 ringgit ($741) per tonne, just slightly above its intraday low at 2,258 ringgit, a level last seen on April 23.
Total traded volumes stood at 31,529 lots of 25 tonnes each, compared to the average daily trading volume of 35,000 lots.
Inventory Level Awaited
On Tuesday, cargo surveyor Societe Generale de Surveillance reported a decline of 5.6 percent in April exports on the month, on slowing Chinese demand. Another surveyor, Intertek Testing Services, reported a fall of 4.3 percent.
Market participants now await Malaysian palm stocks and output data due on May 10 for further market direction. Inventory in the world's second-largest producer of the edible oil stood at 2.17 million tonnes in March, easing from February's 2.43 million.
"Investors are looking ahead. Exports are lower, but we heard production is also lower. It's hard to say whether stocks will drop below 2 million tonnes, but most likely it could be just a marginal drop," said the Kuala Lumpur trader.
In other markets, oil held near $100 a barrel on Thursday, pressured by ample supplies and fresh signals of weak global economic growth, which stirred concern about the demand outlook.
In vegetable oil markets, U.S. soyoil for July delivery edged 0.1 percent lower in late Asian trade, weighed down by concerns of a slowing economic recovery in China.
Palm, soy and crude oil prices at 1004 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY3 2250 +1.00 2250 2255 117
MY PALM OIL JUN3 2255 -28.00 2254 2268 3664
MY PALM OIL JUL3 2259 -27.00 2258 2275 13639
CHINA PALM OLEIN SEP3 5834 -162.00 5826 5900 370838
CHINA SOYOIL SEP3 7184 -156.00 7170 7250 644308
CBOT SOY OIL JUL3 48.80 -0.05 48.75 48.99 5100
NYMEX CRUDE JUN3 91.36 +0.33 90.65 91.49 25634
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.05 ringgit)