MARKET DEVELOPMENT
VEGOILS-Palm Hits 2-month Low, Extends Losses into Sixth Day
VEGOILS-Palm Hits 2-month Low, Extends Losses into Sixth Day
10/01/2013 (Reuters) - Malaysian palm oil futures dropped to their lowest in almost two months on Thursday, stretching losses into a sixth straight session, as a round of technical selling pressured prices and a stronger ringgit curbed buying interest.
Down more than 4 percent so far this week, palm oil prices are on track for their biggest weekly loss in nine, although market players expect the current weakness to attract bargain hunters and stoke demand for the tropical oil.
"There's some technical selling going on. They're testing the levels around 2,520 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But there's quite a lot buying interest coming in at these levels. Compared to Wednesday morning, today's trade is about five to six times more."
By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange inched down about 1 percent to 2,522 ringgit ($769) per tonne, after hitting 2,517 ringgit earlier - its lowest since early November.
A stronger ringgit weighed by making the ringgit-priced feedstock more expensive for overseas investors.
Total traded volume stood at 19,553 lots of 25 tonnes, much higher than the usual 12,500 lots.
Technicals showed Malaysian palm oil is expected to test a support at 2,520 ringgit per tonne, a break below which will open the way towards 2,485 ringgit, Reuters market analyst Wang Tao said.
Worries that rising edible oil supplies would outstrip global demand also lingered, as investors fretted that sluggish exports could keep palm oil stockpiles elevated.
A Reuters poll estimated that Malaysian palm oil stocks in December likely eased for the first time since June after monsoon weather hampered production, but weaker export demand stemmed the fall.
The official report on December end-stocks, exports and output in the world's No.2 producer will be released by industry regulator the Malaysian Palm Oil Board on Friday.
Investors will be watching out for cargo surveyor export data for the first 10 days of January, also to be issued on Friday, to gauge food and fuel demand of the tropical oil from its biggest buyers China and India.
In competing vegetable oil markets, the U.S. soyoil contract for March rose 0.3 percent in early Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange gained 0.4 percent.
In other markets, Brent crude rose towards $108 a barrel, supported by continued concerns over supply from the Middle East and North Africa, but gains were capped by a firm dollar.
Palm, soy and crude oil prices at 0548 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2480 -37.00 2480 2490 46
MY PALM OIL FEB4 2502 -27.00 2499 2538 1176
MY PALM OIL MAR4 2522 -25.00 2517 2555 8727
CHINA PALM OLEIN MAY4 5802 -28.00 5776 5866 474994
CHINA SOYOIL MAY4 6632 +26.00 6578 6674 437714
CBOT SOY OIL MAR4 37.79 +0.11 37.60 37.90 2607
NYMEX CRUDE FEB4 92.63 +0.30 92.50 92.71 2726
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=3.28 Malaysian ringgit)
Down more than 4 percent so far this week, palm oil prices are on track for their biggest weekly loss in nine, although market players expect the current weakness to attract bargain hunters and stoke demand for the tropical oil.
"There's some technical selling going on. They're testing the levels around 2,520 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But there's quite a lot buying interest coming in at these levels. Compared to Wednesday morning, today's trade is about five to six times more."
By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange inched down about 1 percent to 2,522 ringgit ($769) per tonne, after hitting 2,517 ringgit earlier - its lowest since early November.
A stronger ringgit weighed by making the ringgit-priced feedstock more expensive for overseas investors.
Total traded volume stood at 19,553 lots of 25 tonnes, much higher than the usual 12,500 lots.
Technicals showed Malaysian palm oil is expected to test a support at 2,520 ringgit per tonne, a break below which will open the way towards 2,485 ringgit, Reuters market analyst Wang Tao said.
Worries that rising edible oil supplies would outstrip global demand also lingered, as investors fretted that sluggish exports could keep palm oil stockpiles elevated.
A Reuters poll estimated that Malaysian palm oil stocks in December likely eased for the first time since June after monsoon weather hampered production, but weaker export demand stemmed the fall.
The official report on December end-stocks, exports and output in the world's No.2 producer will be released by industry regulator the Malaysian Palm Oil Board on Friday.
Investors will be watching out for cargo surveyor export data for the first 10 days of January, also to be issued on Friday, to gauge food and fuel demand of the tropical oil from its biggest buyers China and India.
In competing vegetable oil markets, the U.S. soyoil contract for March rose 0.3 percent in early Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange gained 0.4 percent.
In other markets, Brent crude rose towards $108 a barrel, supported by continued concerns over supply from the Middle East and North Africa, but gains were capped by a firm dollar.
Palm, soy and crude oil prices at 0548 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2480 -37.00 2480 2490 46
MY PALM OIL FEB4 2502 -27.00 2499 2538 1176
MY PALM OIL MAR4 2522 -25.00 2517 2555 8727
CHINA PALM OLEIN MAY4 5802 -28.00 5776 5866 474994
CHINA SOYOIL MAY4 6632 +26.00 6578 6674 437714
CBOT SOY OIL MAR4 37.79 +0.11 37.60 37.90 2607
NYMEX CRUDE FEB4 92.63 +0.30 92.50 92.71 2726
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=3.28 Malaysian ringgit)