MARKET DEVELOPMENT
VEGOILS-Palm Oil Drops to 4-1/2 Month Low on Demand Worries
VEGOILS-Palm Oil Drops to 4-1/2 Month Low on Demand Worries
27/05/2014 (Reuters) - Malaysian palm oil futures slid to their lowest in four-and-a-half months on Monday as the ringgit continued to advance and amid worries that festival-driven demand will fizzle out faster than expected.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange touched 2,490 ringgit in early trade, its lowest since Jan. 15, before settling at 2,508 ringgit ($780) per tonne at Monday's close, down 0.4 percent.
Total traded volume stood at 41,939 lots of 25 tonnes, above the average 35,000 lots.
"The Ramadan demand has quickly faded. Exports are moving down compared to the first 15 days," said a trader with a local commodities brokerage.
Shipments of Malaysian palm oil products during May 1-25 rose 14 percent from a month ago to 1.09 million tonnes, cargo surveyor Intertek Testing Services showed, slowing down from a 23 percent jump recorded in the first half of May.
Another cargo surveyor, Societe Generale de Surveillance, showed that exports for the same period rose 13.1 percent.
The Muslim festival of Ramadan and Eid al-Fitr, celebrated with communal fasting and feasting from end-June onwards, typically drives up consumption of edible oils especially in India, Pakistan, and the Middle East.
But investors are fretting that demand for palm oil, used as cooking oil and as an ingredient in foods such as cookies and chocolate, will not be strong enough to outstrip rising production of the tropical oil and trim 1.77 million tonnes of Malaysian palm stocks.
"For the full month, people are anticipating a 10 percent rise on month - it won't be that extraordinary to reduce stocks, knowing that in a few weeks time production will keep rising," the Kuala Lumpur-based trader added.
The Malaysian ringgit gained 0.20 percent to trade at 3.2055 against the U.S. dollar on Monday, with some bank traders pegging the currency to rise past 3.2000. A stronger ringgit makes palm feedstock more expensive for overseas buyers and refiners, curbing buying interest.
Technicals, however, were bullish. Malaysian palm oil may gain further to 2,545 ringgit per tonne as its rebound from the May 21 low of 2,492 ringgit may extend, said Reuters market analyst Wang Tao.
In other markets, Brent crude fell below $110 a barrel on
Monday, dipping further from last week's two-and-a-half month high as worries over Ukraine eased slightly after its presidential election.
In other competing vegetable oil markets, the most active September soybean oil contract on the Dalian Commodities Exchange had lost 0.4 percent in late Asian trade.
The U.S. soy markets were closed for a public holiday.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2516 -25.00 2491 2528 622
MY PALM OIL JUL4 2514 -11.00 2487 2522 5802
MY PALM OIL AUG4 2508 -9.00 2483 2513 20464
CHINA PALM OLEIN SEP4 5898 -54.00 5886 5932 208388
CHINA SOYOIL SEP4 6800 -30.00 6784 6822 201580
CBOT SOY OIL JUL4 40.40 +0.00 0.00 0.00 0
NYMEX CRUDE JUL4 104.05 -0.30 103.92 104.34 8375
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 = 6.2365 Chinese yuan)
($1 = 3.2120 ringgit)
The benchmark August contract on the Bursa Malaysia Derivatives Exchange touched 2,490 ringgit in early trade, its lowest since Jan. 15, before settling at 2,508 ringgit ($780) per tonne at Monday's close, down 0.4 percent.
Total traded volume stood at 41,939 lots of 25 tonnes, above the average 35,000 lots.
"The Ramadan demand has quickly faded. Exports are moving down compared to the first 15 days," said a trader with a local commodities brokerage.
Shipments of Malaysian palm oil products during May 1-25 rose 14 percent from a month ago to 1.09 million tonnes, cargo surveyor Intertek Testing Services showed, slowing down from a 23 percent jump recorded in the first half of May.
Another cargo surveyor, Societe Generale de Surveillance, showed that exports for the same period rose 13.1 percent.
The Muslim festival of Ramadan and Eid al-Fitr, celebrated with communal fasting and feasting from end-June onwards, typically drives up consumption of edible oils especially in India, Pakistan, and the Middle East.
But investors are fretting that demand for palm oil, used as cooking oil and as an ingredient in foods such as cookies and chocolate, will not be strong enough to outstrip rising production of the tropical oil and trim 1.77 million tonnes of Malaysian palm stocks.
"For the full month, people are anticipating a 10 percent rise on month - it won't be that extraordinary to reduce stocks, knowing that in a few weeks time production will keep rising," the Kuala Lumpur-based trader added.
The Malaysian ringgit gained 0.20 percent to trade at 3.2055 against the U.S. dollar on Monday, with some bank traders pegging the currency to rise past 3.2000. A stronger ringgit makes palm feedstock more expensive for overseas buyers and refiners, curbing buying interest.
Technicals, however, were bullish. Malaysian palm oil may gain further to 2,545 ringgit per tonne as its rebound from the May 21 low of 2,492 ringgit may extend, said Reuters market analyst Wang Tao.
In other markets, Brent crude fell below $110 a barrel on
Monday, dipping further from last week's two-and-a-half month high as worries over Ukraine eased slightly after its presidential election.
In other competing vegetable oil markets, the most active September soybean oil contract on the Dalian Commodities Exchange had lost 0.4 percent in late Asian trade.
The U.S. soy markets were closed for a public holiday.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2516 -25.00 2491 2528 622
MY PALM OIL JUL4 2514 -11.00 2487 2522 5802
MY PALM OIL AUG4 2508 -9.00 2483 2513 20464
CHINA PALM OLEIN SEP4 5898 -54.00 5886 5932 208388
CHINA SOYOIL SEP4 6800 -30.00 6784 6822 201580
CBOT SOY OIL JUL4 40.40 +0.00 0.00 0.00 0
NYMEX CRUDE JUL4 104.05 -0.30 103.92 104.34 8375
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 = 6.2365 Chinese yuan)
($1 = 3.2120 ringgit)