MARKET DEVELOPMENT
VEGOILS-Palm Oil Rises to Near 3-week High on Weaker Ringgit, Export Hopes
VEGOILS-Palm Oil Rises to Near 3-week High on Weaker Ringgit, Export Hopes
24/01/2014 (Reuters) - Malaysian palm oil futures rose to a near 3-week high on Thursday after the local currency tumbled again, raising hopes for stronger demand as the ringgit-priced feedstock becomes more attractive to overseas buyers and refiners.
The ringgit weakened to 3.3335 against the U.S. dollar late on Thursday, its weakest since Aug. 28. Market players expect the currency to fall to 3.35-3.38 by February, boosting margins for refineries and overseas investors.
"The weakening ringgit is definitely supportive for the palm market," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"A weaker ringgit will encourage export demand as well. Exports have not been so good in early January. Perhaps it could improve by the end of the month," the trader added.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange had inched up 1.1 percent to 2,603 ringgit ($782) per tonne by Thursday's close. Prices earlier touched 2,604 ringgit, their highest since Jan. 6.
Total traded volume stood at 24,668 lots of 25 tonnes, lower than the usual 35,000 lots.
Industry regulator Malaysian Palm Oil Board said on Thursday palm oil stocks in the No. 2 producer could shrink to 1.6-1.8 million tonnes at the end of this year, as growing demand for the tropical oil outstrips higher output. Stocks stood at 1.99 million tonnes at end-2013.
Malaysian 2014 palm exports are seen at 18.5 million tonnes, slightly higher than 18.12 million tonnes shipped in 2013, a senior MPOB official said at an industry meet in Kuala Lumpur.
Top edible oil buyer India will likely import record volumes of vegetable oils in the next marketing year to feed growing demand, a trade body chief said, despite a recent government hike in import duties for the refined grade.
This could lead to higher purchases of refined palm oil from Malaysia, the world's second-largest producer, despite earlier fears that Malaysian exports of the refined grade would plummet.
Technicals, however, were bearish. Malaysian palm oil is expected to drop to 2,534 ringgit per tonne, as it has failed to break a resistance of 2,588 ringgit, Reuters market analyst Wang Tao said.
In other markets, Brent crude edged towards $108 a barrel on Thursday as weak data from the world's top two oil consumers revived worries over the outlook for demand.
In other competing vegetable oil markets, the U.S. soyoil contract for March rose 0.7 percent in late Asian trade.
The most active May soybean oil contract on the Dalian Commodities Exchange was nearly flat.
Palm, soy and crude oil prices at 1023 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2585 +28.00 2564 2585 681
MY PALM OIL MAR4 2592 +27.00 2563 2595 2806
MY PALM OIL APR4 2603 +28.00 2571 2604 13213
CHINA PALM OLEIN MAY4 5846 -44.00 5816 5874 531724
CHINA SOYOIL MAY4 6660 -2.00 6638 6678 349170
CBOT SOY OIL MAR4 38.11 +0.27 37.84 38.25 6194
NYMEX CRUDE MAR4 96.86 +0.13 96.41 96.90 12980
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=3.33 Malaysian ringgit)
The ringgit weakened to 3.3335 against the U.S. dollar late on Thursday, its weakest since Aug. 28. Market players expect the currency to fall to 3.35-3.38 by February, boosting margins for refineries and overseas investors.
"The weakening ringgit is definitely supportive for the palm market," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"A weaker ringgit will encourage export demand as well. Exports have not been so good in early January. Perhaps it could improve by the end of the month," the trader added.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange had inched up 1.1 percent to 2,603 ringgit ($782) per tonne by Thursday's close. Prices earlier touched 2,604 ringgit, their highest since Jan. 6.
Total traded volume stood at 24,668 lots of 25 tonnes, lower than the usual 35,000 lots.
Industry regulator Malaysian Palm Oil Board said on Thursday palm oil stocks in the No. 2 producer could shrink to 1.6-1.8 million tonnes at the end of this year, as growing demand for the tropical oil outstrips higher output. Stocks stood at 1.99 million tonnes at end-2013.
Malaysian 2014 palm exports are seen at 18.5 million tonnes, slightly higher than 18.12 million tonnes shipped in 2013, a senior MPOB official said at an industry meet in Kuala Lumpur.
Top edible oil buyer India will likely import record volumes of vegetable oils in the next marketing year to feed growing demand, a trade body chief said, despite a recent government hike in import duties for the refined grade.
This could lead to higher purchases of refined palm oil from Malaysia, the world's second-largest producer, despite earlier fears that Malaysian exports of the refined grade would plummet.
Technicals, however, were bearish. Malaysian palm oil is expected to drop to 2,534 ringgit per tonne, as it has failed to break a resistance of 2,588 ringgit, Reuters market analyst Wang Tao said.
In other markets, Brent crude edged towards $108 a barrel on Thursday as weak data from the world's top two oil consumers revived worries over the outlook for demand.
In other competing vegetable oil markets, the U.S. soyoil contract for March rose 0.7 percent in late Asian trade.
The most active May soybean oil contract on the Dalian Commodities Exchange was nearly flat.
Palm, soy and crude oil prices at 1023 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2585 +28.00 2564 2585 681
MY PALM OIL MAR4 2592 +27.00 2563 2595 2806
MY PALM OIL APR4 2603 +28.00 2571 2604 13213
CHINA PALM OLEIN MAY4 5846 -44.00 5816 5874 531724
CHINA SOYOIL MAY4 6660 -2.00 6638 6678 349170
CBOT SOY OIL MAR4 38.11 +0.27 37.84 38.25 6194
NYMEX CRUDE MAR4 96.86 +0.13 96.41 96.90 12980
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=3.33 Malaysian ringgit)