MARKET DEVELOPMENT
VEGOILS-Palm Drops, Tracks Weak Equities; Inventory Draw Eyed
VEGOILS-Palm Drops, Tracks Weak Equities; Inventory Draw Eyed
09/07/2013 (Reuters) - Malaysian palm oil futures edged down on Monday, tracking a weakness in equity markets, but losses were limited by hopes that stocks of the tropical oil in the world's No.2 producer will ease.
Asian shares tumbled in early trade as strong U.S. jobs growth reinforced the likelihood that the Federal Reserve will roll back its stimulus in coming months, while Beijing's pledge to choke off credit to industries plagued by overcapacity to force consolidation also hurt regional sentiment.
"We have negative externals such as China, a big buyer, whose stock market dropped badly today and its economic situation is deepening downwards," said a trader with a foreign commodities brokerage. "But our local sentiment is different. The supply-demand situation is still positive for end-stocks."
China, the world's second-biggest palm oil buyer, could see its growth grinding towards a 23-year low, a Reuters poll showed, hinting at difficult times ahead for the tropical oil as demand dwindles.
But investors are pinning hopes that strong exports to meet demand during a Muslim festival would cut back Malaysia's inventories to a year low and boost prices.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release its June end-stocks and production report on Wednesday.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange had lost 0.4 percent to 2,375 ringgit ($740) per tonne by Monday's close.
Total traded volumes stood at 28,252 lots of 25 tonnes each, below the usual 35,000 lots. Prices traded in a range of 2,365 to 2,395 ringgit.
Technicals showed that Malaysian palm oil is expected to revisit its July 5 low of 2,345 ringgit per tonne, as it may have completed a rebound from the July 2 low of 2,324 ringgit, Reuters market analyst Wang Tao said.
Market participants will be looking towards July 1-10 export data which will also be released on Wednesday.
Traders say although exports in the first 10 days of July could be propped up by last-minute buying ahead of the Muslim holy month of Ramadan, demand could taper off in the second half of the month.
Prices could also be further depressed as a higher palm production cycle kicks in. A Reuters poll showed that output of the tropical oil is seen rising 6 percent in June, suggesting the seasonal cycle could have already begun.
In other markets, Brent crude slipped below $108 due to a rising U.S. dollar, after tensions in Egypt stoked concerns about global oil supplies and initially drove prices to a three-month high.
In vegetable oil markets, U.S. soyoil for December fell 0.5 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange slipped 1 percent.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL3 0 +0.00 0 0 60
MY PALM OIL AUG3 2376 -9.00 2368 2395 1741
MY PALM OIL SEP3 2375 -10.00 2365 2395 16442
CHINA PALM OLEIN JAN4 5850 -38.00 5834 5960 487148
CHINA SOYOIL JAN4 7238 -66.00 7212 7368 943160
CBOT SOY OIL DEC3 45.83 -0.22 45.59 46.26 6930
NYMEX CRUDE AUG3 103.11 -0.11 102.78 104.12 25843
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=3.211 ringgit)
Asian shares tumbled in early trade as strong U.S. jobs growth reinforced the likelihood that the Federal Reserve will roll back its stimulus in coming months, while Beijing's pledge to choke off credit to industries plagued by overcapacity to force consolidation also hurt regional sentiment.
"We have negative externals such as China, a big buyer, whose stock market dropped badly today and its economic situation is deepening downwards," said a trader with a foreign commodities brokerage. "But our local sentiment is different. The supply-demand situation is still positive for end-stocks."
China, the world's second-biggest palm oil buyer, could see its growth grinding towards a 23-year low, a Reuters poll showed, hinting at difficult times ahead for the tropical oil as demand dwindles.
But investors are pinning hopes that strong exports to meet demand during a Muslim festival would cut back Malaysia's inventories to a year low and boost prices.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release its June end-stocks and production report on Wednesday.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange had lost 0.4 percent to 2,375 ringgit ($740) per tonne by Monday's close.
Total traded volumes stood at 28,252 lots of 25 tonnes each, below the usual 35,000 lots. Prices traded in a range of 2,365 to 2,395 ringgit.
Technicals showed that Malaysian palm oil is expected to revisit its July 5 low of 2,345 ringgit per tonne, as it may have completed a rebound from the July 2 low of 2,324 ringgit, Reuters market analyst Wang Tao said.
Market participants will be looking towards July 1-10 export data which will also be released on Wednesday.
Traders say although exports in the first 10 days of July could be propped up by last-minute buying ahead of the Muslim holy month of Ramadan, demand could taper off in the second half of the month.
Prices could also be further depressed as a higher palm production cycle kicks in. A Reuters poll showed that output of the tropical oil is seen rising 6 percent in June, suggesting the seasonal cycle could have already begun.
In other markets, Brent crude slipped below $108 due to a rising U.S. dollar, after tensions in Egypt stoked concerns about global oil supplies and initially drove prices to a three-month high.
In vegetable oil markets, U.S. soyoil for December fell 0.5 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange slipped 1 percent.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL3 0 +0.00 0 0 60
MY PALM OIL AUG3 2376 -9.00 2368 2395 1741
MY PALM OIL SEP3 2375 -10.00 2365 2395 16442
CHINA PALM OLEIN JAN4 5850 -38.00 5834 5960 487148
CHINA SOYOIL JAN4 7238 -66.00 7212 7368 943160
CBOT SOY OIL DEC3 45.83 -0.22 45.59 46.26 6930
NYMEX CRUDE AUG3 103.11 -0.11 102.78 104.12 25843
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=3.211 ringgit)