MARKET DEVELOPMENT
VEGOILS-Palm Snaps Three Days of Losses on Flood Fears
VEGOILS-Palm Snaps Three Days of Losses on Flood Fears
05/12/2013 (Reuters) - Malaysian palm oil futures ended higher on Wednesday, snapping a three-session losing streak on concerns that the worsening monsoon floods in key palm-growing areas would disrupt production of the tropical oil.
Heavy rain and thunderstorms that swept over parts of Malaysia in the last few days have caused flooding in low-lying areas in Johor and Pahang that are abundant with oil palm plantations.
Floods make harvesting and transportation of palm fruit to mills risky as roads become inundated and plantation workers are forced to evacuate.
Local media reported that nearly 9,000 people in both the states have been evacuated so far. The monsoon season typically begins in November and stretches out until end-March, but is the wettest from end-November to February.
"Most of the weather forecasts are predicting heavy rains and floods," said a trader with a foreign commodities brokerage.
"This means production is definitely going to drop in December," the Kuala Lumpur-based trader added.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched up 1.5 percent to 2,656 ringgit ($822) per tonne by Wednesday's close.
Total traded volume stood at 30,134 lots of 25 tonnes, below the average 35,000 lots as some investors waited for more updates on the flood situation.
Technicals were, however, bearish. Malaysian palm oil may edge down a little to a support at 2,588 ringgit per tonne, Reuters market analyst Wang Tao said.
Firmer crude oil prices also provided some support for palm, as it made the tropical oil a more attractive option as a biodiesel feedstock.
Crude palm oil is increasingly used as a "green" additive to fossil fuels as it can cut costs and reduce environmentally damaging emissions.
Brent crude held steady above $112 a barrel on Wednesday, while the U.S. benchmark rose more than $1 to a five-week high after news of the scheduled start of a key pipeline that was expected to relieve a glut at the country's main oil storage hub.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.3 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1003 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2615 +44.00 2580 2615 55
MY PALM OIL JAN4 2641 +34.00 2610 2647 2614
MY PALM OIL FEB4 2656 +39.00 2619 2662 16717
CHINA PALM OLEIN MAY4 6252 -2.00 6202 6268 547510
CHINA SOYOIL MAY4 7262 -32.00 7240 7278 663668
CBOT SOY OIL JAN4 40.33 +0.21 40.10 40.40 5145
NYMEX CRUDE JAN4 97.31 +1.27 96.75 97.53 23932
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)
Heavy rain and thunderstorms that swept over parts of Malaysia in the last few days have caused flooding in low-lying areas in Johor and Pahang that are abundant with oil palm plantations.
Floods make harvesting and transportation of palm fruit to mills risky as roads become inundated and plantation workers are forced to evacuate.
Local media reported that nearly 9,000 people in both the states have been evacuated so far. The monsoon season typically begins in November and stretches out until end-March, but is the wettest from end-November to February.
"Most of the weather forecasts are predicting heavy rains and floods," said a trader with a foreign commodities brokerage.
"This means production is definitely going to drop in December," the Kuala Lumpur-based trader added.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched up 1.5 percent to 2,656 ringgit ($822) per tonne by Wednesday's close.
Total traded volume stood at 30,134 lots of 25 tonnes, below the average 35,000 lots as some investors waited for more updates on the flood situation.
Technicals were, however, bearish. Malaysian palm oil may edge down a little to a support at 2,588 ringgit per tonne, Reuters market analyst Wang Tao said.
Firmer crude oil prices also provided some support for palm, as it made the tropical oil a more attractive option as a biodiesel feedstock.
Crude palm oil is increasingly used as a "green" additive to fossil fuels as it can cut costs and reduce environmentally damaging emissions.
Brent crude held steady above $112 a barrel on Wednesday, while the U.S. benchmark rose more than $1 to a five-week high after news of the scheduled start of a key pipeline that was expected to relieve a glut at the country's main oil storage hub.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.3 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1003 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2615 +44.00 2580 2615 55
MY PALM OIL JAN4 2641 +34.00 2610 2647 2614
MY PALM OIL FEB4 2656 +39.00 2619 2662 16717
CHINA PALM OLEIN MAY4 6252 -2.00 6202 6268 547510
CHINA SOYOIL MAY4 7262 -32.00 7240 7278 663668
CBOT SOY OIL JAN4 40.33 +0.21 40.10 40.40 5145
NYMEX CRUDE JAN4 97.31 +1.27 96.75 97.53 23932
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)