MARKET DEVELOPMENT
VEGOILS-Palm Oil Slides to 7-month Low on Supply Pressure
VEGOILS-Palm Oil Slides to 7-month Low on Supply Pressure
30/05/2014 (Reuters) - Malaysian palm oil dropped for a fifth consecutive session on Thursday to its lowest in seven months with rising supplies and sluggish demand putting pressure on the market.
Palm oil, which is on track for a third straight month of decline, could find a floor on the back of rising U.S. soybean oil prices.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell 1.7 percent to 2,460 ringgit ($766) per tonne by the Thursday's close. The contract hit an intraday low of 2,459 ringgit a tonne, the lowest since Oct. 29. Total traded volume stood at 32,914 lots of 25 tonnes, just below the usual 35,000 lots.
"There are concerns as demand is still weak while seasonally the supply is improving," said a Melbourne-based analyst. "But the downside is limited as we are seeing firming soybean oil prices and India is low on vegetable oil inventories, so they could start restocking soon." Cargo surveyor data showed that exports of Malaysian palm oil products during May 1-25 rose 13-14 percent from a month ago.
On the technical front, palm oil is expected to find a support at 2,472 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection level, according to Reuters market analyst Wang Tao.
The losses in the Malaysian palm oil market came despite firm crude oil prices.
Brent crude rose back above $110 a barrel on Thursday on signs of stronger demand from top oil consumer the United States, with a sharp drop in its gasoline stocks adding to recent data showing a strengthening economy.
Sime Darby Bhd, the world's top oil palm planter by landbank size, sees average palm oil prices at 2,500 ringgit ($780) a tonne this year, a company official said on Thursday, but added that prices could go as high as 2,700 ringgit per tonne if the El Nino weather phenomenon returns to curb yields. "Demand in China and India has slowed down. The bumper soybean crop is also going to hamper prices. Prices will likely be around 2,500 ringgit," said Philip Kunjappy, an official with Sime Darby's group corporate services. "With El Nino, at the most they can rise by 200 ringgit," he added.
Sime Darby also expects its production of fresh fruit bunches to fall between 5-6 percent in its financial year ending 2014 after a drought between January-March crimped growth of crops.
In other competing vegetable oil markets, the U.S. soyoil for July delivery rose 0.4 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange added 0.2 percent.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2460 -47.00 2460 2490 312
MY PALM OIL JUL4 2462 -42.00 2462 2499 3067
MY PALM OIL AUG4 2460 -42.00 2459 2499 18898
CHINA PALM OLEIN SEP4 5912 -12.00 5910 5952 209180
CHINA SOYOIL SEP4 6798 +14.00 6792 6822 195096
CBOT SOY OIL JUL4 39.76 +0.13 39.66 39.96 3959
NYMEX CRUDE JUL4 102.85 +0.13 102.68 103.11 11786
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 = 3.213 Malaysian ringgit)
($1 = 6.2399 Chinese yuan)
Palm oil, which is on track for a third straight month of decline, could find a floor on the back of rising U.S. soybean oil prices.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell 1.7 percent to 2,460 ringgit ($766) per tonne by the Thursday's close. The contract hit an intraday low of 2,459 ringgit a tonne, the lowest since Oct. 29. Total traded volume stood at 32,914 lots of 25 tonnes, just below the usual 35,000 lots.
"There are concerns as demand is still weak while seasonally the supply is improving," said a Melbourne-based analyst. "But the downside is limited as we are seeing firming soybean oil prices and India is low on vegetable oil inventories, so they could start restocking soon." Cargo surveyor data showed that exports of Malaysian palm oil products during May 1-25 rose 13-14 percent from a month ago.
On the technical front, palm oil is expected to find a support at 2,472 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection level, according to Reuters market analyst Wang Tao.
The losses in the Malaysian palm oil market came despite firm crude oil prices.
Brent crude rose back above $110 a barrel on Thursday on signs of stronger demand from top oil consumer the United States, with a sharp drop in its gasoline stocks adding to recent data showing a strengthening economy.
Sime Darby Bhd, the world's top oil palm planter by landbank size, sees average palm oil prices at 2,500 ringgit ($780) a tonne this year, a company official said on Thursday, but added that prices could go as high as 2,700 ringgit per tonne if the El Nino weather phenomenon returns to curb yields. "Demand in China and India has slowed down. The bumper soybean crop is also going to hamper prices. Prices will likely be around 2,500 ringgit," said Philip Kunjappy, an official with Sime Darby's group corporate services. "With El Nino, at the most they can rise by 200 ringgit," he added.
Sime Darby also expects its production of fresh fruit bunches to fall between 5-6 percent in its financial year ending 2014 after a drought between January-March crimped growth of crops.
In other competing vegetable oil markets, the U.S. soyoil for July delivery rose 0.4 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange added 0.2 percent.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2460 -47.00 2460 2490 312
MY PALM OIL JUL4 2462 -42.00 2462 2499 3067
MY PALM OIL AUG4 2460 -42.00 2459 2499 18898
CHINA PALM OLEIN SEP4 5912 -12.00 5910 5952 209180
CHINA SOYOIL SEP4 6798 +14.00 6792 6822 195096
CBOT SOY OIL JUL4 39.76 +0.13 39.66 39.96 3959
NYMEX CRUDE JUL4 102.85 +0.13 102.68 103.11 11786
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 = 3.213 Malaysian ringgit)
($1 = 6.2399 Chinese yuan)