MARKET DEVELOPMENT
VEGOILS-Palm Slips on Profit-taking, But Strong Crude, Oilseed Supply Woes Hold
VEGOILS-Palm Slips on Profit-taking, But Strong Crude, Oilseed Supply Woes Hold
25/02/2014 (Reuters) - Malaysian palm oil futures ended lower for the first time in four days on Monday, as investors took profits from a winning streak that had lifted benchmark prices above a 17-month high, while a stronger ringgit in late trade curbed some buying interest.
But losses were capped by stronger energy markets, which signalled that more of the tropical oil could be snapped up for fuel use.
"There's profit-taking after prices were up for so many days. The ringgit also strengthened a bit," said a trader with a foreign commodities brokerage. "Prices are in a range of 2,700-2,800 ringgit."
By Monday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged down 0.51 percent to 2,745 ringgit ($837) per tonne. Prices were choppy, moving between 2,737-2,777 ringgit.
The Malaysian ringgit climbed 0.4 percent to 3.2825 against the U.S. dollar in late trade on Monday, making the ringgit-denominated palm feedstock more expensive for overseas buyers.
Total traded volume stood at 45,780 lots of 25 tonnes, above the usual 35,000 lots.
Higher crude oil prices would boost demand for palm oil as an alternative feedstock to produce biofuels. Crude palm oil is being increasingly used as a "green" additive to fossil fuels as it can cut costs and cut environmentally damaging emissions.
Brent crude oil rose to around $110 a barrel on Monday, defying declines seen in some other risk assets on news of further supply losses in Africa and expectations of revived oil demand growth. U.S. oil rose 25 cents to $102.45.
"There's a strong push from the soft oils and energy markets," said another Kuala Lumpur-based trader with a foreign commodities brokerage. "The energy market has been very supportive to palm ... there is no downside in sight."
Technicals showed Malaysian palm oil may extend its gain into a range of 2,805-2,821 ringgit, as it has cleared resistance at 2,780 ringgit, said Reuters market analyst Wang Tao.
A recovery in exports in February, as well as concerns of dry weather hurting production of palm fruit in Malaysia and Indonesia, have helped prices rise nearly 8 percent so far this month, setting them on track to post their biggest monthly gain in four.
Hot spells have also made planting difficult in key soy-growing regions in South America, threatening yields of the competing oilseed. Smaller supplies of soybeans for crushing would stoke soyoil prices, potentially pushing buyers to
rival palm oil instead.
In other competing vegetable oil markets, the U.S. soyoil contract for May slipped 0.4 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.4 percent.
Indonesia, the world's biggest producer, said its palm oil exports dropped 23 percent in January from a month ago to 1.57 million tonnes, due to weaker demand from India and Pakistan.
Market participants will be keeping an eye on Malaysian export data due on Tuesday to gauge global demand for the tropical oil, but say that February end-stocks are widely slated to fall from the current 1.93-million tonne level.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2769 -7.00 2769 2789 300
MY PALM OIL APR4 2762 -15.00 2758 2796 5707
MY PALM OIL MAY4 2745 -10.00 2737 2777 24193
CHINA PALM OLEIN MAY4 6164 +76.00 6074 6170 565260
CHINA SOYOIL MAY4 6818 +28.00 6760 6824 278858
CBOT SOY OIL MAY4 41.08 -0.15 40.99 41.24 9298
NYMEX CRUDE APR4 102.14 -0.06 102.11 102.70 13266
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)
But losses were capped by stronger energy markets, which signalled that more of the tropical oil could be snapped up for fuel use.
"There's profit-taking after prices were up for so many days. The ringgit also strengthened a bit," said a trader with a foreign commodities brokerage. "Prices are in a range of 2,700-2,800 ringgit."
By Monday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged down 0.51 percent to 2,745 ringgit ($837) per tonne. Prices were choppy, moving between 2,737-2,777 ringgit.
The Malaysian ringgit climbed 0.4 percent to 3.2825 against the U.S. dollar in late trade on Monday, making the ringgit-denominated palm feedstock more expensive for overseas buyers.
Total traded volume stood at 45,780 lots of 25 tonnes, above the usual 35,000 lots.
Higher crude oil prices would boost demand for palm oil as an alternative feedstock to produce biofuels. Crude palm oil is being increasingly used as a "green" additive to fossil fuels as it can cut costs and cut environmentally damaging emissions.
Brent crude oil rose to around $110 a barrel on Monday, defying declines seen in some other risk assets on news of further supply losses in Africa and expectations of revived oil demand growth. U.S. oil rose 25 cents to $102.45.
"There's a strong push from the soft oils and energy markets," said another Kuala Lumpur-based trader with a foreign commodities brokerage. "The energy market has been very supportive to palm ... there is no downside in sight."
Technicals showed Malaysian palm oil may extend its gain into a range of 2,805-2,821 ringgit, as it has cleared resistance at 2,780 ringgit, said Reuters market analyst Wang Tao.
A recovery in exports in February, as well as concerns of dry weather hurting production of palm fruit in Malaysia and Indonesia, have helped prices rise nearly 8 percent so far this month, setting them on track to post their biggest monthly gain in four.
Hot spells have also made planting difficult in key soy-growing regions in South America, threatening yields of the competing oilseed. Smaller supplies of soybeans for crushing would stoke soyoil prices, potentially pushing buyers to
rival palm oil instead.
In other competing vegetable oil markets, the U.S. soyoil contract for May slipped 0.4 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 0.4 percent.
Indonesia, the world's biggest producer, said its palm oil exports dropped 23 percent in January from a month ago to 1.57 million tonnes, due to weaker demand from India and Pakistan.
Market participants will be keeping an eye on Malaysian export data due on Tuesday to gauge global demand for the tropical oil, but say that February end-stocks are widely slated to fall from the current 1.93-million tonne level.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2769 -7.00 2769 2789 300
MY PALM OIL APR4 2762 -15.00 2758 2796 5707
MY PALM OIL MAY4 2745 -10.00 2737 2777 24193
CHINA PALM OLEIN MAY4 6164 +76.00 6074 6170 565260
CHINA SOYOIL MAY4 6818 +28.00 6760 6824 278858
CBOT SOY OIL MAY4 41.08 -0.15 40.99 41.24 9298
NYMEX CRUDE APR4 102.14 -0.06 102.11 102.70 13266
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)