MARKET DEVELOPMENT
VEGOILS-Palm Falls to Near 7-1/2 Month Low on Disappointing Export Data, Weak Soy
VEGOILS-Palm Falls to Near 7-1/2 Month Low on Disappointing Export Data, Weak Soy
03/06/2014 (Reuters) - Malaysian palm oil futures fell for a seventh straight session on Monday to hit their lowest in nearly seven-and-a-half months, as weak soyoil prices and disappointing export data dragged on the tropical oil.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell to 2,386 ringgit in early trade, its weakest since Oct. 18, 2013, before settling at 2,389 ringgit ($741) per tonne by the midday break, down 1.4 percent.
Total traded volume stood at 15,489 lots of 25 tonnes, above the usual 12,500 lots.
Market participants said although demand for palm oil improved in May compared to April, the export growth slowed down towards the end of the month, signalling dwindling demand for the tropical oil despite a major festival just around the corner.
"Fundamentally, palm itself is not so bearish. But there are people who feel that the export pace has not been too friendly," said a trader with a foreign commodities brokerage.
"We were expecting exports to maintain a very good pace until the end of the month. But the ITS number shows that it did not materialise," the Kuala Lumpur-based trader added.
Cargo surveyor Intertek Testing Services (ITS) reported that a total of 1,315,952 tonnes of Malaysian palm oil products were shipped in May, 7.8 percent higher month-on-month, but slower than the 23 percent jump recorded in the May 1-15 period.
Consumption of palm oil, used as a cooking oil and as an ingredient in a wide range of food, typically climbs ahead of the Muslim holy month of Ramadan and the Eid al-Fitr festival. Ramadan will commence from June-end this year.
Technicals showed that palm oil is expected to drop to 2,341 ringgit per tonne, as it has cleared support at 2,422 ringgit, said Reuters market analyst Wang Tao.
He added that a sudden rise above 2,422 ringgit, however, will signal a false break below this level and the target at 2,341 ringgit has to be temporarily aborted.
]Malaysian palm prices, which set the tone for global prices, have lost more than 10 percent since the start of the year.
Prices in May dropped nearly 8 percent in its largest monthly decline since September 2012, hurt by a stronger ringgit and losses in competing soy markets.
"External markets are on the weak side. Last Friday soy took a big hit. With this kind of sentiment -- exports not up to expectations and soy closing down 90 points last Friday -- you can't really expect the market to rally," the trader added.
The U.S. soyoil contract for July was flat in early Asian trade on Monday, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
In other markets, Brent futures rose towards $110 a barrel as data showing China's factory activity expanded at its quickest pace in five months in May revived hopes of healthy demand growth from the world's second-biggest oil consumer.
Palm, soy and crude oil prices at 0632 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2410 -16.00 2410 2421 10
MY PALM OIL JUL4 2395 -31.00 2390 2418 1036
MY PALM OIL AUG4 2389 -34.00 2386 2416 6750
CHINA PALM OLEIN SEP4 5882 -48.00 5862 5900 235256
CHINA SOYOIL SEP4 6762 -40.00 6750 6788 223938
CBOT SOY OIL JUL4 38.49 +0.00 38.36 38.60 3379
NYMEX CRUDE JUL4 103.29 +0.58 102.84 103.35 6282
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 = 3.222 Malaysian ringgit)
($1 = 6.2473 Chinese yuan)
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell to 2,386 ringgit in early trade, its weakest since Oct. 18, 2013, before settling at 2,389 ringgit ($741) per tonne by the midday break, down 1.4 percent.
Total traded volume stood at 15,489 lots of 25 tonnes, above the usual 12,500 lots.
Market participants said although demand for palm oil improved in May compared to April, the export growth slowed down towards the end of the month, signalling dwindling demand for the tropical oil despite a major festival just around the corner.
"Fundamentally, palm itself is not so bearish. But there are people who feel that the export pace has not been too friendly," said a trader with a foreign commodities brokerage.
"We were expecting exports to maintain a very good pace until the end of the month. But the ITS number shows that it did not materialise," the Kuala Lumpur-based trader added.
Cargo surveyor Intertek Testing Services (ITS) reported that a total of 1,315,952 tonnes of Malaysian palm oil products were shipped in May, 7.8 percent higher month-on-month, but slower than the 23 percent jump recorded in the May 1-15 period.
Consumption of palm oil, used as a cooking oil and as an ingredient in a wide range of food, typically climbs ahead of the Muslim holy month of Ramadan and the Eid al-Fitr festival. Ramadan will commence from June-end this year.
Technicals showed that palm oil is expected to drop to 2,341 ringgit per tonne, as it has cleared support at 2,422 ringgit, said Reuters market analyst Wang Tao.
He added that a sudden rise above 2,422 ringgit, however, will signal a false break below this level and the target at 2,341 ringgit has to be temporarily aborted.
]Malaysian palm prices, which set the tone for global prices, have lost more than 10 percent since the start of the year.
Prices in May dropped nearly 8 percent in its largest monthly decline since September 2012, hurt by a stronger ringgit and losses in competing soy markets.
"External markets are on the weak side. Last Friday soy took a big hit. With this kind of sentiment -- exports not up to expectations and soy closing down 90 points last Friday -- you can't really expect the market to rally," the trader added.
The U.S. soyoil contract for July was flat in early Asian trade on Monday, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
In other markets, Brent futures rose towards $110 a barrel as data showing China's factory activity expanded at its quickest pace in five months in May revived hopes of healthy demand growth from the world's second-biggest oil consumer.
Palm, soy and crude oil prices at 0632 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2410 -16.00 2410 2421 10
MY PALM OIL JUL4 2395 -31.00 2390 2418 1036
MY PALM OIL AUG4 2389 -34.00 2386 2416 6750
CHINA PALM OLEIN SEP4 5882 -48.00 5862 5900 235256
CHINA SOYOIL SEP4 6762 -40.00 6750 6788 223938
CBOT SOY OIL JUL4 38.49 +0.00 38.36 38.60 3379
NYMEX CRUDE JUL4 103.29 +0.58 102.84 103.35 6282
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 = 3.222 Malaysian ringgit)
($1 = 6.2473 Chinese yuan)