MARKET DEVELOPMENT
VEGOILS-Palm Ends Lower on Fresh Fears of Rising Output
VEGOILS-Palm Ends Lower on Fresh Fears of Rising Output
15/10/2013 (Reuters) - Malaysian palm oil futures edged down in tight trade on Monday on renewed worries that a seasonal rise in output in the world's second-largest producer could overwhelm demand in the next three months.
Production of the tropical oil in Malaysia rose a smaller-than-expected 10 percent in September, as output in the Borneo region lagged behind yields in Peninsular Malaysia.
Inventories rose to 1.78 million tonnes at end-September, below expectations of 1.91 million tonnes.
Market players said a delayed onset of palm oil's high cycle could result in production soaring even higher in October and remaining elevated until the end of the year.
"They're talking about high production in October, November and December, and whether or not demand can cope up," said a trader with a foreign commodities brokerage in Malaysia.
"For now the market should be moving in a range between 2,350-2,400 ringgit. But towards the end of the year the market will come under pressure," the trader added.
By Monday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had eased 0.7 percent to 2,363 ringgit ($742) per tonne. Prices traded in a tight range of 2,358 ringgit to 2,383 ringgit.
Total traded volume stood at 27,922 lots of 25 tonnes each,lower than the usual 35,000 lots.
Technicals showed a bearish target at 2,349 ringgit per tonne remains unchanged for Malaysian palm oil as a short-term uptrend from the Sept. 26 low of 2,265 ringgit may have peaked at a resistance of about 2,401 ringgit, Reuters market analyst Wang Tao said.
Demand for Southeast Asian palm oil, which makes up about 90 percent of the world's total palm output, has been healthy since August due to festive demand, which typically drives up consumption.
India, the world's leading buyer, imported 21 percent more palm oil in September compared with a month earlier, the Solvent Extractor's Association (SEA) said on Monday, but October's vegetable oil imports could be limited as soybean supplies from
its summer-sown crop come in.
Exports from top producer Indonesia rose 4 percent to 1.46 million tonnes in August, while exports of Malaysian palm oil products surged 17-23 percent in the first ten days of October.
But investors fear that demand for palm may dwindle in the coming months as competing oilseeds from the U.S. and South America flood the market, paving the way for stocks to climb again.
The U.S. Agriculture Department (USDA) did not provide an update on harvest progress this week due to the partial government shutdown, but analysts estimate that grain harvests were 50 percent complete as of Oct. 6 and farmers in most areas have had good weather for harvesting since then.
In other markets, global oil futures edged lower towards $111 per barrel on Monday as investors awaited the start of Iranian nuclear talks, while a looming deadline to head off U.S. default added to worries about the outlook for oil demand.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1019 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2375 -5.00 2375 2383 46
MY PALM OIL NOV3 2365 -14.00 2358 2377 997
MY PALM OIL DEC3 2363 -17.00 2358 2383 16911
CHINA PALM OLEIN JAN4 5680 +56.00 5600 5700 330052
CHINA SOYOIL JAN4 7058 -28.00 7024 7090 402274
CBOT SOY OIL DEC3 40.54 +0.26 40.10 40.71 5872
NYMEX CRUDE NOV3 101.20 -0.82 101.16 102.52 21519
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=3.183 Malaysian ringgit)
Production of the tropical oil in Malaysia rose a smaller-than-expected 10 percent in September, as output in the Borneo region lagged behind yields in Peninsular Malaysia.
Inventories rose to 1.78 million tonnes at end-September, below expectations of 1.91 million tonnes.
Market players said a delayed onset of palm oil's high cycle could result in production soaring even higher in October and remaining elevated until the end of the year.
"They're talking about high production in October, November and December, and whether or not demand can cope up," said a trader with a foreign commodities brokerage in Malaysia.
"For now the market should be moving in a range between 2,350-2,400 ringgit. But towards the end of the year the market will come under pressure," the trader added.
By Monday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had eased 0.7 percent to 2,363 ringgit ($742) per tonne. Prices traded in a tight range of 2,358 ringgit to 2,383 ringgit.
Total traded volume stood at 27,922 lots of 25 tonnes each,lower than the usual 35,000 lots.
Technicals showed a bearish target at 2,349 ringgit per tonne remains unchanged for Malaysian palm oil as a short-term uptrend from the Sept. 26 low of 2,265 ringgit may have peaked at a resistance of about 2,401 ringgit, Reuters market analyst Wang Tao said.
Demand for Southeast Asian palm oil, which makes up about 90 percent of the world's total palm output, has been healthy since August due to festive demand, which typically drives up consumption.
India, the world's leading buyer, imported 21 percent more palm oil in September compared with a month earlier, the Solvent Extractor's Association (SEA) said on Monday, but October's vegetable oil imports could be limited as soybean supplies from
its summer-sown crop come in.
Exports from top producer Indonesia rose 4 percent to 1.46 million tonnes in August, while exports of Malaysian palm oil products surged 17-23 percent in the first ten days of October.
But investors fear that demand for palm may dwindle in the coming months as competing oilseeds from the U.S. and South America flood the market, paving the way for stocks to climb again.
The U.S. Agriculture Department (USDA) did not provide an update on harvest progress this week due to the partial government shutdown, but analysts estimate that grain harvests were 50 percent complete as of Oct. 6 and farmers in most areas have had good weather for harvesting since then.
In other markets, global oil futures edged lower towards $111 per barrel on Monday as investors awaited the start of Iranian nuclear talks, while a looming deadline to head off U.S. default added to worries about the outlook for oil demand.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1019 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2375 -5.00 2375 2383 46
MY PALM OIL NOV3 2365 -14.00 2358 2377 997
MY PALM OIL DEC3 2363 -17.00 2358 2383 16911
CHINA PALM OLEIN JAN4 5680 +56.00 5600 5700 330052
CHINA SOYOIL JAN4 7058 -28.00 7024 7090 402274
CBOT SOY OIL DEC3 40.54 +0.26 40.10 40.71 5872
NYMEX CRUDE NOV3 101.20 -0.82 101.16 102.52 21519
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=3.183 Malaysian ringgit)