MARKET DEVELOPMENT
VEGOILS-Palm Extends Gains To 4-wk High Ahead of Key Industry Report
VEGOILS-Palm Extends Gains To 4-wk High Ahead of Key Industry Report
10/10/2013 (Reuters) - Malaysian palm oil futures climbed to their highest level in four weeks on Wednesday as investors bet a key industry report would show that palm stocks and output growth in September were lower than anticipated.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release official data on September's palm stocks, production and exports in the world's second-largest grower on Thursday.
The market has been buoyed by a Reuters survey on Monday that put end-September stocks at a six-month high of 1.91 million tonnes, but that is still below some estimates.
"There's some position-squaring ahead of the MPOB report," said a Malaysian trader with a local commodities brokerage.
"But it looks like the current prices have factored in most of the bullish news. I anticipate the upside will be capped between 2,360-2,370 ringgit until more is known about September's production," the trader added.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange touched 2,371 ringgit ($741) in late Wednesday trade, its highest since Sept. 10, before easing to 2,368 ringgit by the close, up 0.8 percent from the previous session.
Total traded volume stood at 25,983 lots of 25 tonnes each, much lower than the usual 35,000 lots.
Technicals showed a bullish target at 2,401 ringgit per tonne remains unchanged for Malaysian palm oil as indicated by an inverted head-and-shoulders and a Fibonacci
retracement analysis, Reuters market analyst Wang Tao said.
The weaker local currency in late trade also supported prices, making the feedstock cheaper for overseas buyers. The Malaysian ringgit inched down 0.17 percent against the U.S. dollar.
Analysts say palm oil prices, which are still down about 3 percent this year, may have found a floor, helped by top producer Indonesia's ambitious biodiesel policy that could mean more of the tropical oil will be used in making biofuels.
"This will ensure that any significant palm oil supply increase can be converted into biodiesel, and hence keep inventory levels in check," said Kenanga Investment Bank analyst Alan Lim in a report on Wednesday.
He forecast average crude palm oil prices in 2013/14 would range between 2,400-2,700 ringgit per metric tonne.
In other markets, global oil prices dropped below $110 per barrel on Wednesday after U.S. lawmakers made little progress to end a budget impasse that threatens to hurt investor confidence and curb demand in the world's biggest oil consumer.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The most active January soybean oil contract on the Dalian Commodities Exchange rose 0.9 percent.
Palm, soy and crude oil prices at 1004 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2365 +15.00 2354 2365 165
MY PALM OIL NOV3 2370 +21.00 2351 2370 2002
MY PALM OIL DEC3 2368 +19.00 2350 2371 12034
CHINA PALM OLEIN JAN4 5528 +32.00 5506 5564 321544
CHINA SOYOIL JAN4 7056 +66.00 7006 7088 630160
CBOT SOY OIL DEC3 40.46 +0.03 40.35 40.61 5759
NYMEX CRUDE NOV3 103.46 -0.03 103.19 103.75 11797
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=3.198 Malaysian ringgit)
Industry regulator the Malaysian Palm Oil Board (MPOB) will release official data on September's palm stocks, production and exports in the world's second-largest grower on Thursday.
The market has been buoyed by a Reuters survey on Monday that put end-September stocks at a six-month high of 1.91 million tonnes, but that is still below some estimates.
"There's some position-squaring ahead of the MPOB report," said a Malaysian trader with a local commodities brokerage.
"But it looks like the current prices have factored in most of the bullish news. I anticipate the upside will be capped between 2,360-2,370 ringgit until more is known about September's production," the trader added.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange touched 2,371 ringgit ($741) in late Wednesday trade, its highest since Sept. 10, before easing to 2,368 ringgit by the close, up 0.8 percent from the previous session.
Total traded volume stood at 25,983 lots of 25 tonnes each, much lower than the usual 35,000 lots.
Technicals showed a bullish target at 2,401 ringgit per tonne remains unchanged for Malaysian palm oil as indicated by an inverted head-and-shoulders and a Fibonacci
retracement analysis, Reuters market analyst Wang Tao said.
The weaker local currency in late trade also supported prices, making the feedstock cheaper for overseas buyers. The Malaysian ringgit inched down 0.17 percent against the U.S. dollar.
Analysts say palm oil prices, which are still down about 3 percent this year, may have found a floor, helped by top producer Indonesia's ambitious biodiesel policy that could mean more of the tropical oil will be used in making biofuels.
"This will ensure that any significant palm oil supply increase can be converted into biodiesel, and hence keep inventory levels in check," said Kenanga Investment Bank analyst Alan Lim in a report on Wednesday.
He forecast average crude palm oil prices in 2013/14 would range between 2,400-2,700 ringgit per metric tonne.
In other markets, global oil prices dropped below $110 per barrel on Wednesday after U.S. lawmakers made little progress to end a budget impasse that threatens to hurt investor confidence and curb demand in the world's biggest oil consumer.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The most active January soybean oil contract on the Dalian Commodities Exchange rose 0.9 percent.
Palm, soy and crude oil prices at 1004 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2365 +15.00 2354 2365 165
MY PALM OIL NOV3 2370 +21.00 2351 2370 2002
MY PALM OIL DEC3 2368 +19.00 2350 2371 12034
CHINA PALM OLEIN JAN4 5528 +32.00 5506 5564 321544
CHINA SOYOIL JAN4 7056 +66.00 7006 7088 630160
CBOT SOY OIL DEC3 40.46 +0.03 40.35 40.61 5759
NYMEX CRUDE NOV3 103.46 -0.03 103.19 103.75 11797
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=3.198 Malaysian ringgit)