MARKET DEVELOPMENT
VEGOILS-Palm Slips to 2-wk Low on Oversupply Fears; Investors Gear up for 2014 Trade
VEGOILS-Palm Slips to 2-wk Low on Oversupply Fears; Investors Gear up for 2014 Trade
07/01/2014 (Reuters) - Malaysian palm oil futures slipped to a two-week low on Monday as forecasts of bumper supplies from the world's top palm producers continued to weigh on investor sentiment, while weak competing overseas markets also pressured prices.
Indonesia and Malaysia -- which together account for nearly all of the world's palm oil supply -- expect their palm production to climb in 2014, fanning fears that their supply may outstrip food and fuel demand.
Indonesia said its 2013 palm oil output likely grew to 24.4 million tonnes and could rise further to 28 million tonnes in 2014, while No. 2 producer Malaysia expects to hit a record 19.4 million tonnes in 2013 and inch up to 19.5 million tonnes this year.
Despite the forecasts, traders said prices would likely balance out in the coming weeks after market players are done taking positions for the year ahead.
"It's the first day of 'real' trading. For a lot of traders, it's about starting up their positions again after closing books in 2013," said a trader with a foreign commodities brokerage in Malaysia.
"There's some manoeuvring around -- the first few days is not a good indication of where the market is going. We have to let things settle down first and let everybody get into the groove," the trader added.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange had dropped 1.3 percent to 2,606 ringgit ($792) per tonne by Monday's close. Prices earlier hit 2,588 ringgit, the lowest level since Dec. 23.
Total traded volume stood at 47,264 lots of 25 tonnes, much higher than the usual 35,000 lots.
Prospects of higher production of competing oilseeds have dragged on U.S. and China soy markets tracked by palm oil.
Larger soybean crops would mean more volumes to be crushed into soyoil, adding to global stockpiles.
The U.S. soyoil contract for March fell 0.6 percent in late Asian trade on Monday. The most active May soybean oil contract on the Dalian Commodities Exchange dropped 2.2 percent.
In other markets, Brent crude oil rose above $107 a barrel on Monday, rebounding after its biggest weekly fall in six months on news of the restart of a key Libyan oilfield.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2555 -51.00 2555 2575 308
MY PALM OIL FEB4 2593 -37.00 2574 2613 4664
MY PALM OIL MAR4 2606 -34.00 2588 2629 21341
CHINA PALM OLEIN MAY4 5976 -102.00 5958 6062 611684
CHINA SOYOIL MAY4 6696 -148.00 6692 6810 601708
CBOT SOY OIL MAR4 38.36 -0.24 38.36 38.68 2915
NYMEX CRUDE FEB4 94.47 +0.51 93.91 94.50 11960
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=3.29 Malaysian ringgit)
Indonesia and Malaysia -- which together account for nearly all of the world's palm oil supply -- expect their palm production to climb in 2014, fanning fears that their supply may outstrip food and fuel demand.
Indonesia said its 2013 palm oil output likely grew to 24.4 million tonnes and could rise further to 28 million tonnes in 2014, while No. 2 producer Malaysia expects to hit a record 19.4 million tonnes in 2013 and inch up to 19.5 million tonnes this year.
Despite the forecasts, traders said prices would likely balance out in the coming weeks after market players are done taking positions for the year ahead.
"It's the first day of 'real' trading. For a lot of traders, it's about starting up their positions again after closing books in 2013," said a trader with a foreign commodities brokerage in Malaysia.
"There's some manoeuvring around -- the first few days is not a good indication of where the market is going. We have to let things settle down first and let everybody get into the groove," the trader added.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange had dropped 1.3 percent to 2,606 ringgit ($792) per tonne by Monday's close. Prices earlier hit 2,588 ringgit, the lowest level since Dec. 23.
Total traded volume stood at 47,264 lots of 25 tonnes, much higher than the usual 35,000 lots.
Prospects of higher production of competing oilseeds have dragged on U.S. and China soy markets tracked by palm oil.
Larger soybean crops would mean more volumes to be crushed into soyoil, adding to global stockpiles.
The U.S. soyoil contract for March fell 0.6 percent in late Asian trade on Monday. The most active May soybean oil contract on the Dalian Commodities Exchange dropped 2.2 percent.
In other markets, Brent crude oil rose above $107 a barrel on Monday, rebounding after its biggest weekly fall in six months on news of the restart of a key Libyan oilfield.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2555 -51.00 2555 2575 308
MY PALM OIL FEB4 2593 -37.00 2574 2613 4664
MY PALM OIL MAR4 2606 -34.00 2588 2629 21341
CHINA PALM OLEIN MAY4 5976 -102.00 5958 6062 611684
CHINA SOYOIL MAY4 6696 -148.00 6692 6810 601708
CBOT SOY OIL MAR4 38.36 -0.24 38.36 38.68 2915
NYMEX CRUDE FEB4 94.47 +0.51 93.91 94.50 11960
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=3.29 Malaysian ringgit)