MARKET DEVELOPMENT
VEGOILS-Palm Oil Falls As U.S. Fed Move Boosts Ringgit
VEGOILS-Palm Oil Falls As U.S. Fed Move Boosts Ringgit
20/09/2013 (Reuters) - Malaysian palm oil futures fell on Thursday after the ringgit jumped to a three-month high following the U.S. Federal Reserve's surprise decision to postpone any reduction in its bond-buying programme, eating into profits for overseas buyers.
The ringgit rose nearly 3 percent on Thursday after the Fed stunned markets and decided not to taper its monthly purchases of $85 billion in U.S. bonds just yet.
Although the Fed's move bolstered the value of commodities priced in the dollar and lifted soy, crude oil and other markets, it made ringgit-priced palm oil more expensive for overseas buyers and kept a lid on gains.
"Because the Fed's stimulus is still on, most investors are talking about pumping more money into commodity markets," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But for palm oil, the stronger ringgit has weighed down the market and offset optimism on the Fed's move," the trader said.
By Thursday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 0.2 percent to 2,318 ringgit ($736) per tonne. Prices in the morning session had dropped to 2,296 ringgit, near a one-month low of 2,294 ringgit hit on Tuesday.
Total traded volumes stood at 47,814 lots of 25 tonnes each, much higher than the average 35,000 lots.
On the technical front, Malaysian palm oil may fall to 2,270 ringgit per tonne, according to Reuters market analyst Wang Tao.
Indonesia and Malaysia, the world's top producers that contribute about 90 percent of global palm oil supply, are expected to see higher output starting this month as oil palm trees enter the peak production cycle.
Leading industry analyst Dorab Mistry said last week that the higher output cycle could last into April 2014, adding to the supply of competing oilseeds and dragging prices to new lows in January.
Prices have lost 3.6 percent so far this month.
But strong demand for the tropical oil has helped prop up sentiment. Data from cargo surveyors showed that exports of Malaysian palm oil in the first half of September climbed between 12-14 percent compared to the same period in August.
Investors will be watching for export data for the Sept. 1-20 period, to be released on Friday, to gauge demand.
Brent oil rose for a second day on Thursday after the U.S. Fed's surprise, but gains were capped after Iran's President vowed his government would never develop nuclear weapons.
In vegetable oil markets, the U.S. soyoil contract for December rose 0.4 in late Asian trade. The Dalian Commodities Exchange is closed from Sept. 19 onwards for the
Mid-Autumn Festival and will resume trading on Monday.
Palm, soy and crude oil prices at 1009 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2320 -9.00 2306 2329 916
MY PALM OIL NOV3 2319 -4.00 2299 2330 4598
MY PALM OIL DEC3 2318 -4.00 2296 2330 22694
CHINA PALM OLEIN JAN4 5392 +2.00 5378 5452 402222
CHINA SOYOIL JAN4 7070 -6.00 7056 7126 485690
CBOT SOY OIL DEC3 42.89 +0.18 42.82 43.06 3975
NYMEX CRUDE OCT3 108.78 +0.73 108.13 108.99 5253
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 = 3.149 Malaysian ringgit)
The ringgit rose nearly 3 percent on Thursday after the Fed stunned markets and decided not to taper its monthly purchases of $85 billion in U.S. bonds just yet.
Although the Fed's move bolstered the value of commodities priced in the dollar and lifted soy, crude oil and other markets, it made ringgit-priced palm oil more expensive for overseas buyers and kept a lid on gains.
"Because the Fed's stimulus is still on, most investors are talking about pumping more money into commodity markets," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But for palm oil, the stronger ringgit has weighed down the market and offset optimism on the Fed's move," the trader said.
By Thursday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 0.2 percent to 2,318 ringgit ($736) per tonne. Prices in the morning session had dropped to 2,296 ringgit, near a one-month low of 2,294 ringgit hit on Tuesday.
Total traded volumes stood at 47,814 lots of 25 tonnes each, much higher than the average 35,000 lots.
On the technical front, Malaysian palm oil may fall to 2,270 ringgit per tonne, according to Reuters market analyst Wang Tao.
Indonesia and Malaysia, the world's top producers that contribute about 90 percent of global palm oil supply, are expected to see higher output starting this month as oil palm trees enter the peak production cycle.
Leading industry analyst Dorab Mistry said last week that the higher output cycle could last into April 2014, adding to the supply of competing oilseeds and dragging prices to new lows in January.
Prices have lost 3.6 percent so far this month.
But strong demand for the tropical oil has helped prop up sentiment. Data from cargo surveyors showed that exports of Malaysian palm oil in the first half of September climbed between 12-14 percent compared to the same period in August.
Investors will be watching for export data for the Sept. 1-20 period, to be released on Friday, to gauge demand.
Brent oil rose for a second day on Thursday after the U.S. Fed's surprise, but gains were capped after Iran's President vowed his government would never develop nuclear weapons.
In vegetable oil markets, the U.S. soyoil contract for December rose 0.4 in late Asian trade. The Dalian Commodities Exchange is closed from Sept. 19 onwards for the
Mid-Autumn Festival and will resume trading on Monday.
Palm, soy and crude oil prices at 1009 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2320 -9.00 2306 2329 916
MY PALM OIL NOV3 2319 -4.00 2299 2330 4598
MY PALM OIL DEC3 2318 -4.00 2296 2330 22694
CHINA PALM OLEIN JAN4 5392 +2.00 5378 5452 402222
CHINA SOYOIL JAN4 7070 -6.00 7056 7126 485690
CBOT SOY OIL DEC3 42.89 +0.18 42.82 43.06 3975
NYMEX CRUDE OCT3 108.78 +0.73 108.13 108.99 5253
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 = 3.149 Malaysian ringgit)