MARKET DEVELOPMENT
VEGOILS-Palm Ends Flat, But Posts Biggest Weekly Gain in Nearly 4 Months
VEGOILS-Palm Ends Flat, But Posts Biggest Weekly Gain in Nearly 4 Months
22/02/2014 (Reuters) - Malaysian palm oil futures ended flat on Friday, with prices pressured by losses in competing soyoil markets overseas, although robust export demand and worries of tighter edible oil supply curbed losses.
The U.S. soyoil contract for May fell 0.1 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange slipped 0.2 percent.
Weekly benchmark prices, however, rose 3.4 percent, stretching gains into a third straight week and posting their biggest gain in nearly four months, after better-than-expected export data and concerns of dry weather squeezing supplies lifted the market to a 17-month high on Tuesday.
"It's a profit-taking day. The Dalian is not so impressive, U.S. soybean oil was marginally down in the morning," said a trader with a foreign commodities brokerage.
"Prices will try to consolidate between 2,720-2,700 ringgit.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange ended flat on Friday at 2,755 ringgit ($837) per tonne. Trade was choppy, with prices moving in a 2,720 to 2,758 ringgit range.
Total traded volume stood at 47,313 lots of 25 tonnes, much higher than the usual 35,000 lots.
Market participants said dry conditions in parts of No.2 producer Malaysia have hindered the growth of fresh fruit bunches on oil palm trees, leading to a sharp drop in output this month.
The tropical plant typically needs ample sunshine and water to flourish, and yields could fall further in the next few months if the weather does not let up, traders said.
"The weather is seasonally hot this time of the year in Malaysia, Indonesia and parts of Thailand. But it's hotter and drier this year," the Kuala Lumpur-based trader said. "It might be the effect of El Nino coming in. I see output going down, while demand is going up."
The El Nino weather pattern that can trigger drought in some parts of the world is increasingly likely to return this year, according to scientists, hitting production of key foods such as rice, wheat and sugar. A strong El Nino can wither crops in Australia, Southeast Asia, India and Africa when other parts of the globe such as the U.S. Midwest and Brazil are drenched in rains.
Cargo surveyors reported on Thursday that exports of Malaysian palm oil products rose about 17 percent in the Feb. 1-20 period from a month earlier, thanks to bigger demand from top edible oil consumer India.
Robust demand from the biodiesel industry is also slated to give a leg to palm prices this year, as aggressive biodiesel programmes in top producers Indonesia and Malaysia soak up supplies and curb exports of the tropical oil.
Biodiesel use in Indonesia could rise to 3.5 million tonnes this year, up from about 1 million tonnes consumed in 2013, Martua Sitorus, executive deputy chairman at the world's top palm oil processor Wilmar International told Reuters.
But technicals showed Malaysian palm oil was expected to retrace to support at 2,712 ringgit per tonne as it has failed to break resistance at 2,764 ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude oil slipped towards $110 a barrel on Friday but remained on course for its highest weekly close this year, as supply disruptions in Africa tighten the market.
Palm, soy and crude oil prices at 1027 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2777 +12.00 2736 2777 745
MY PALM OIL APR4 2779 +9.00 2739 2779 4732
MY PALM OIL MAY4 2755 +0.00 2720 2758 21723
CHINA PALM OLEIN MAY4 6074 +12.00 6052 6140 372234
CHINA SOYOIL MAY4 6772 -12.00 6764 6830 227842
CBOT SOY OIL MAR4 40.57 +0.00 40.36 40.62 3541
NYMEX CRUDE APR4 102.54 -0.21 102.50 102.92 6761
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)
The U.S. soyoil contract for May fell 0.1 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange slipped 0.2 percent.
Weekly benchmark prices, however, rose 3.4 percent, stretching gains into a third straight week and posting their biggest gain in nearly four months, after better-than-expected export data and concerns of dry weather squeezing supplies lifted the market to a 17-month high on Tuesday.
"It's a profit-taking day. The Dalian is not so impressive, U.S. soybean oil was marginally down in the morning," said a trader with a foreign commodities brokerage.
"Prices will try to consolidate between 2,720-2,700 ringgit.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange ended flat on Friday at 2,755 ringgit ($837) per tonne. Trade was choppy, with prices moving in a 2,720 to 2,758 ringgit range.
Total traded volume stood at 47,313 lots of 25 tonnes, much higher than the usual 35,000 lots.
Market participants said dry conditions in parts of No.2 producer Malaysia have hindered the growth of fresh fruit bunches on oil palm trees, leading to a sharp drop in output this month.
The tropical plant typically needs ample sunshine and water to flourish, and yields could fall further in the next few months if the weather does not let up, traders said.
"The weather is seasonally hot this time of the year in Malaysia, Indonesia and parts of Thailand. But it's hotter and drier this year," the Kuala Lumpur-based trader said. "It might be the effect of El Nino coming in. I see output going down, while demand is going up."
The El Nino weather pattern that can trigger drought in some parts of the world is increasingly likely to return this year, according to scientists, hitting production of key foods such as rice, wheat and sugar. A strong El Nino can wither crops in Australia, Southeast Asia, India and Africa when other parts of the globe such as the U.S. Midwest and Brazil are drenched in rains.
Cargo surveyors reported on Thursday that exports of Malaysian palm oil products rose about 17 percent in the Feb. 1-20 period from a month earlier, thanks to bigger demand from top edible oil consumer India.
Robust demand from the biodiesel industry is also slated to give a leg to palm prices this year, as aggressive biodiesel programmes in top producers Indonesia and Malaysia soak up supplies and curb exports of the tropical oil.
Biodiesel use in Indonesia could rise to 3.5 million tonnes this year, up from about 1 million tonnes consumed in 2013, Martua Sitorus, executive deputy chairman at the world's top palm oil processor Wilmar International told Reuters.
But technicals showed Malaysian palm oil was expected to retrace to support at 2,712 ringgit per tonne as it has failed to break resistance at 2,764 ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude oil slipped towards $110 a barrel on Friday but remained on course for its highest weekly close this year, as supply disruptions in Africa tighten the market.
Palm, soy and crude oil prices at 1027 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2777 +12.00 2736 2777 745
MY PALM OIL APR4 2779 +9.00 2739 2779 4732
MY PALM OIL MAY4 2755 +0.00 2720 2758 21723
CHINA PALM OLEIN MAY4 6074 +12.00 6052 6140 372234
CHINA SOYOIL MAY4 6772 -12.00 6764 6830 227842
CBOT SOY OIL MAR4 40.57 +0.00 40.36 40.62 3541
NYMEX CRUDE APR4 102.54 -0.21 102.50 102.92 6761
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)