MARKET DEVELOPMENT
VEGOILS-Palm Oil Rises on Prospects of Tighter Edible Oil Supply
VEGOILS-Palm Oil Rises on Prospects of Tighter Edible Oil Supply
07/02/2014 (Reuters) - Malaysian palm oil futures ended higher on Thursday on prospects of seasonally lower output of the tropical oil as well as a dry spell in soy-growing Brazil that would potentially squeeze global edible oil supplies.
A Reuters survey of planters and traders showed that Malaysian palm oil production last month likely fell to 1.52 million tonnes, down 8.8 percent from December as trees enter a resting period which results in smaller yields.
The poll also showed that end-stocks are expected to ease for the first time in seven months, although sluggish export demand would curb the drop and likely keep inventories in the second-largest producer little changed at 1.98 million tonnes.
"There are forecasts that January palm output will be lower by almost 10 percent, and that is helping to prop up the market," said a trader with a local commodities brokerage.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange closed up 0.9 percent at 2,568 ringgit ($773) per tonne. Prices were locked in a range between 2,552-2,575 ringgit.
Total traded volume stood at 25,141 lots of 25 tonnes, below the average 35,000 lots.
Technicals were bullish. Malaysian palm oil may break a resistance zone of 2,560-2,569 ringgit per tonne and rise further to 2,581 ringgit, Reuters market analyst Wang Tao said.
Dry spells over parts of Brazil signalled that the major soy grower might not be able to produce the bumper harvest initially expected. Tighter supplies of the competing oilseed for crushing would lift soyoil prices and channel demand to rival palm oil.
"There was some speculative selling earlier in anticipation of huge crops from Brazil. But now the factors are turning friendly, so there's a lot of short-covering in the palm market," the Malaysia-based trader added.
"If the dry spell continues, there will be a lot of supply constraints ... consumers could turn to palm."
The U.S. soyoil contract for March rose 0.4 percent in late Asian trade. The Dalian Commodities Exchange is closed for the Lunar New Year and will re-open on Feb. 7.
In other markets, Brent crude held steady above $106 a barrel as worries over global economic growth dented the demand outlook, with its premium to U.S. crude continuing to narrow as more cold weather hit the United States.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2565 +25.00 2555 2571 139
MY PALM OIL MAR4 2565 +23.00 2550 2572 1073
MY PALM OIL APR4 2568 +22.00 2552 2575 11985
CHINA PALM OLEIN MAY4 5672 -28.00 5630 5704 209596
CHINA SOYOIL MAY4 6390 -76.00 6370 6432 299596
CBOT SOY OIL MAR4 38.36 +0.13 38.15 38.39 4756
NYMEX CRUDE MAR4 97.82 +0.44 97.25 97.85 9511
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 = 3.32 Malaysian ringgit)
A Reuters survey of planters and traders showed that Malaysian palm oil production last month likely fell to 1.52 million tonnes, down 8.8 percent from December as trees enter a resting period which results in smaller yields.
The poll also showed that end-stocks are expected to ease for the first time in seven months, although sluggish export demand would curb the drop and likely keep inventories in the second-largest producer little changed at 1.98 million tonnes.
"There are forecasts that January palm output will be lower by almost 10 percent, and that is helping to prop up the market," said a trader with a local commodities brokerage.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange closed up 0.9 percent at 2,568 ringgit ($773) per tonne. Prices were locked in a range between 2,552-2,575 ringgit.
Total traded volume stood at 25,141 lots of 25 tonnes, below the average 35,000 lots.
Technicals were bullish. Malaysian palm oil may break a resistance zone of 2,560-2,569 ringgit per tonne and rise further to 2,581 ringgit, Reuters market analyst Wang Tao said.
Dry spells over parts of Brazil signalled that the major soy grower might not be able to produce the bumper harvest initially expected. Tighter supplies of the competing oilseed for crushing would lift soyoil prices and channel demand to rival palm oil.
"There was some speculative selling earlier in anticipation of huge crops from Brazil. But now the factors are turning friendly, so there's a lot of short-covering in the palm market," the Malaysia-based trader added.
"If the dry spell continues, there will be a lot of supply constraints ... consumers could turn to palm."
The U.S. soyoil contract for March rose 0.4 percent in late Asian trade. The Dalian Commodities Exchange is closed for the Lunar New Year and will re-open on Feb. 7.
In other markets, Brent crude held steady above $106 a barrel as worries over global economic growth dented the demand outlook, with its premium to U.S. crude continuing to narrow as more cold weather hit the United States.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2565 +25.00 2555 2571 139
MY PALM OIL MAR4 2565 +23.00 2550 2572 1073
MY PALM OIL APR4 2568 +22.00 2552 2575 11985
CHINA PALM OLEIN MAY4 5672 -28.00 5630 5704 209596
CHINA SOYOIL MAY4 6390 -76.00 6370 6432 299596
CBOT SOY OIL MAR4 38.36 +0.13 38.15 38.39 4756
NYMEX CRUDE MAR4 97.82 +0.44 97.25 97.85 9511
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 = 3.32 Malaysian ringgit)