MARKET DEVELOPMENT
VEGOILS-Palm Oil Higher, Investors Cover Ahead of Industry Meeting
VEGOILS-Palm Oil Higher, Investors Cover Ahead of Industry Meeting
29/11/2013 (Reuters) - Malaysian palm oil futures ended higher on Thursday as a weak ringgit spurred investors to square positions ahead of an industry gathering which was expected to provide bullish news for the tropical oil.
Trade volumes were subdued, with most investors avoiding risky bets during the Indonesian Palm Oil Conference and Price Outlook which ends on Friday, where industry officials and analysts will deliver their views on prices, supply and demand for the vegetable oil.
"The weaker ringgit is one of the main reason investors want to cover before the speakers get onto the rostrum," said a trader with a local commodities brokerage.
Market participants expected a positive outlook for palm oil, with expectation that output volumes from top producers Indonesia and Malaysia will undershoot estimates this year.
"The talk is that Indonesia is going to produce less than 27 million tonnes this year. They were initially looking at 30 million tonnes," the Malaysia-based trader added.
"A lot them feel that the speakers predict a target of 2,800-2,900 ringgit in Jan-Feb-March."
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 2,656 ringgit ($822) per tonne by Thursday's close.
Total traded volume stood at 18,723 lots of 25 tonnes each, almost half the typical 35,000 lots.
On the technical front, Reuters market analyst Wang Tao expected palm oil to rise towards its Nov. 22 high of 2,692 ringgit per tonne.
Government initiatives to push forward the biodiesel industries in Indonesia and Malaysia, the world's biggest palm oil producers, have lifted benchmark prices, which could post their first yearly gain since 2010.
But investors said falling crude oil prices could crimp export demand for the "green" biodiesel and make it less attractive as a substitute.
U.S. oil fell 12 cents to $92.18 on Thursday, hovering near the lowest in almost six months. It touched a low of $91.77 on Wednesday, its weakest since June 3.
"It all depends on crude oil prices. If crude trades below $90 per barrel, I'm not sure about the biodiesel story and whether it will slow down," said a trader with a foreign commodities brokerage.
"But Indonesia will be going ahead, irrespective of where crude oil is," the trader added.
In competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.1 percent in early Asian trade. The U.S. soyoil market is closed for the U.S. Thanksgiving holiday.
Palm, soy and crude oil prices at 1030 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2627 +7.00 2591 2630 184
MY PALM OIL JAN4 2654 +15.00 2626 2663 2164
MY PALM OIL FEB4 2656 +16.00 2626 2666 11824
CHINA PALM OLEIN MAY4 6318 +24.00 6284 6358 787198
CHINA SOYOIL MAY4 7254 +4.00 7230 7282 684364
CBOT SOY OIL JAN4 40.35 +0.00 0.00 0.00 0
NYMEX CRUDE JAN4 92.17 -0.13 92.08 92.43 6099
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=3.23 Malaysian ringgit)
Trade volumes were subdued, with most investors avoiding risky bets during the Indonesian Palm Oil Conference and Price Outlook which ends on Friday, where industry officials and analysts will deliver their views on prices, supply and demand for the vegetable oil.
"The weaker ringgit is one of the main reason investors want to cover before the speakers get onto the rostrum," said a trader with a local commodities brokerage.
Market participants expected a positive outlook for palm oil, with expectation that output volumes from top producers Indonesia and Malaysia will undershoot estimates this year.
"The talk is that Indonesia is going to produce less than 27 million tonnes this year. They were initially looking at 30 million tonnes," the Malaysia-based trader added.
"A lot them feel that the speakers predict a target of 2,800-2,900 ringgit in Jan-Feb-March."
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose 0.6 percent to 2,656 ringgit ($822) per tonne by Thursday's close.
Total traded volume stood at 18,723 lots of 25 tonnes each, almost half the typical 35,000 lots.
On the technical front, Reuters market analyst Wang Tao expected palm oil to rise towards its Nov. 22 high of 2,692 ringgit per tonne.
Government initiatives to push forward the biodiesel industries in Indonesia and Malaysia, the world's biggest palm oil producers, have lifted benchmark prices, which could post their first yearly gain since 2010.
But investors said falling crude oil prices could crimp export demand for the "green" biodiesel and make it less attractive as a substitute.
U.S. oil fell 12 cents to $92.18 on Thursday, hovering near the lowest in almost six months. It touched a low of $91.77 on Wednesday, its weakest since June 3.
"It all depends on crude oil prices. If crude trades below $90 per barrel, I'm not sure about the biodiesel story and whether it will slow down," said a trader with a foreign commodities brokerage.
"But Indonesia will be going ahead, irrespective of where crude oil is," the trader added.
In competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.1 percent in early Asian trade. The U.S. soyoil market is closed for the U.S. Thanksgiving holiday.
Palm, soy and crude oil prices at 1030 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2627 +7.00 2591 2630 184
MY PALM OIL JAN4 2654 +15.00 2626 2663 2164
MY PALM OIL FEB4 2656 +16.00 2626 2666 11824
CHINA PALM OLEIN MAY4 6318 +24.00 6284 6358 787198
CHINA SOYOIL MAY4 7254 +4.00 7230 7282 684364
CBOT SOY OIL JAN4 40.35 +0.00 0.00 0.00 0
NYMEX CRUDE JAN4 92.17 -0.13 92.08 92.43 6099
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=3.23 Malaysian ringgit)