MARKET DEVELOPMENT
VEGOILS-Palm Ends Lower on Profit-taking, Dry Weather Worries Support
VEGOILS-Palm Ends Lower on Profit-taking, Dry Weather Worries Support
28/02/2014 (Reuters) - Malaysian palm oil futures ended lower on Thursday as investors booked profits after the previous day's gains, but concerns over unfavourable weather squeezing supplies curbed losses and kept prices near a 17-month high.
Prices jumped to 2,818 ringgit late Wednesday, their highest level since Sept. 20, 2012, underpinned by worries of dry weather hurting production in Southeast Asia, where most of the world's palm oil is grown.
"There's a bit of profit-taking today after the strong rally yesterday. The range will be around 2,780-2,850 ringgit," said a trader with a foreign commodities brokerage, adding that full month production is slated to fall more than 13 percent from January's 1.51 million tonnes.
Benchmark prices have climbed nearly 9 percent in February -- their biggest gain in four months -- on anticipation that the sharp drop in output would tighten stocks of the tropical oil.
Planters told Reuters that dry weather lasting more than two months can hurt yields six months to two years down the line.
By Thursday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had inched down 1.1 percent to 2,780 ringgit ($848) per tonne, with prices trading between 2,770-2,807 ringgit.
Total traded volume stood at 34,197 lots of 25 tonnes, just below the average 35,000 lots.
Technicals showed that Malaysian palm oil third month contract is expected to drop to 2,747 ringgit, due to the completion of a five-wave cycle that developed from the Jan. 28 low of 2,519 ringgit, said Reuters market analyst Wang Tao.
Investors will be keeping an eye on Malaysian export data for the full month of February on Friday to gauge global demand for the tropical oil.
Export demand had dwindled towards the end of the month, slowing from the rapid growth early February, but traders said end-stocks were widely slated to fall more than 5 percent from the current 1.93-million-tonne level due to weaker
output.
In other competing vegetable oil markets, the U.S. soyoil contract for May lost 0.3 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 1.1 percent.
Brazil's crushing association, Abiove, is standing by its forecast for a record soy crop of 88.6 million tonnes despite concerns over heavy rains in top growing state Mato Grosso and dry weather in No. 2 growing state Parana.
Parana had lost some 2 million tonnes of soybeans to drought and hot weather in January and February, the state's government said earlier. Smaller supplies of soybeans for crushing would stoke soyoil prices, potentially pushing buyers to rival palm oil.
In other markets, Brent oil futures briefly slipped below $109 on Thursday, pressured by warmer weather in the United States and worries about escalating turmoil in Ukraine, though supply-disruption concerns kept losses in check.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2816 -14.00 2787 2845 214
MY PALM OIL APR4 2790 -39.00 2785 2830 2711
MY PALM OIL MAY4 2780 -30.00 2770 2807 21466
CHINA PALM OLEIN MAY4 6152 +70.00 6136 6194 303426
CHINA SOYOIL MAY4 6820 +74.00 6802 6862 193568
CBOT SOY OIL MAY4 41.31 -0.15 41.21 41.50 4299
NYMEX CRUDE APR4 102.38 -0.21 102.19 102.61 12338
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)
($1 = 6.1284 Chinese yuan)
Prices jumped to 2,818 ringgit late Wednesday, their highest level since Sept. 20, 2012, underpinned by worries of dry weather hurting production in Southeast Asia, where most of the world's palm oil is grown.
"There's a bit of profit-taking today after the strong rally yesterday. The range will be around 2,780-2,850 ringgit," said a trader with a foreign commodities brokerage, adding that full month production is slated to fall more than 13 percent from January's 1.51 million tonnes.
Benchmark prices have climbed nearly 9 percent in February -- their biggest gain in four months -- on anticipation that the sharp drop in output would tighten stocks of the tropical oil.
Planters told Reuters that dry weather lasting more than two months can hurt yields six months to two years down the line.
By Thursday's close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had inched down 1.1 percent to 2,780 ringgit ($848) per tonne, with prices trading between 2,770-2,807 ringgit.
Total traded volume stood at 34,197 lots of 25 tonnes, just below the average 35,000 lots.
Technicals showed that Malaysian palm oil third month contract is expected to drop to 2,747 ringgit, due to the completion of a five-wave cycle that developed from the Jan. 28 low of 2,519 ringgit, said Reuters market analyst Wang Tao.
Investors will be keeping an eye on Malaysian export data for the full month of February on Friday to gauge global demand for the tropical oil.
Export demand had dwindled towards the end of the month, slowing from the rapid growth early February, but traders said end-stocks were widely slated to fall more than 5 percent from the current 1.93-million-tonne level due to weaker
output.
In other competing vegetable oil markets, the U.S. soyoil contract for May lost 0.3 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange rose 1.1 percent.
Brazil's crushing association, Abiove, is standing by its forecast for a record soy crop of 88.6 million tonnes despite concerns over heavy rains in top growing state Mato Grosso and dry weather in No. 2 growing state Parana.
Parana had lost some 2 million tonnes of soybeans to drought and hot weather in January and February, the state's government said earlier. Smaller supplies of soybeans for crushing would stoke soyoil prices, potentially pushing buyers to rival palm oil.
In other markets, Brent oil futures briefly slipped below $109 on Thursday, pressured by warmer weather in the United States and worries about escalating turmoil in Ukraine, though supply-disruption concerns kept losses in check.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2816 -14.00 2787 2845 214
MY PALM OIL APR4 2790 -39.00 2785 2830 2711
MY PALM OIL MAY4 2780 -30.00 2770 2807 21466
CHINA PALM OLEIN MAY4 6152 +70.00 6136 6194 303426
CHINA SOYOIL MAY4 6820 +74.00 6802 6862 193568
CBOT SOY OIL MAY4 41.31 -0.15 41.21 41.50 4299
NYMEX CRUDE APR4 102.38 -0.21 102.19 102.61 12338
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)
($1 = 6.1284 Chinese yuan)