MARKET DEVELOPMENT
VEGOILS-Palm Up After 8-Day Losing Streak on Bargain Hunting
VEGOILS-Palm Up After 8-Day Losing Streak on Bargain Hunting
05/06/2014 (Reuters) - Malaysian palm oil futures ended higher on Wednesday after an eight-day losing streak, as the steep fall in prices attracted bargain hunters looking for cheap deals, although anticipation of rising production put a lid on gains.
Palm prices have slid more than 10 percent from a May 15 top of 2,630 ringgit to fall to a seven-and-a-half low of 2,375 ringgit in late Tuesday trade, weighed by a strong ringgit, weakness in comparative soy markets overseas, and disappointing export data.
"Low prices are seeing good demand," said a trader with a local commodities brokerage. "However, the pick-up in output will see end-May stocks around 1.87-1.90 million tonnes."
"This factor, combined with global weakness in other competing oils, is putting a lid on prices," the Malaysia-based trader added.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had inched up 1.9 percent to 2,433 ringgit ($751) per tonne by Wednesday's close.
Total traded volume stood at 42,354 lots of 25 tonnes, above the usual 35,000 lots.
Technicals showed palm oil has found support at 2,395 ringgit per tonne and may continue to hover around this level for one more trading session, said Reuters market analyst Wang Tao.
India's new government will not raise duties on palm oil in the short-term, official sources said on Wednesday, despite demands by domestic oilseed processors to cut cheap imports from the world's top palm producer.
A decision to put a hold on any duty increase by India, the world's biggest palm oil buyer, could help reduce bearish sentiment and lend support to global palm prices which have lost more than 8 percent so far this year.
A slightly weaker ringgit also helped stoke buying interest from overseas investors and refiners. The Malaysian ringgit shed 0.2 percent to trade at 3.2355 per dollar on Wednesday.
"A month back we had targeted the ringgit to rise and hit 3.1700-3.1900, but it gained to 3.2015 on May 22 and after that began to depreciate slowly," a Kuala Lumpur-based trader with a local commodities firm said.
"It should provide the undertone support for crude palm oil futures."
Malaysian palm stocks stood at a three-month high of 1.77 million tonnes at end-April, with output volumes hitting thei highest level since December last year.
Some market participants estimate that production of crude palm oil rose again in May, possibly outstripping the increase in exports and adding to stockpiles.
In other markets, Brent crude rose above $109 a barrel on Wednesday, as traders eyed U.S. oil inventory data and looked to euro zone policies that may spur growth and boost the region's energy demand.
In other competing vegetable oil markets, the U.S. soyoil contract for July rose 1.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.3 percent.
Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2440 +40.00 2405 2440 219
MY PALM OIL JUL4 2444 +49.00 2404 2445 3173
MY PALM OIL AUG4 2433 +46.00 2395 2434 19626
CHINA PALM OLEIN SEP4 5814 -2.00 5794 5838 157658
CHINA SOYOIL SEP4 6706 +22.00 6682 6730 207446
CBOT SOY OIL JUL4 38.83 +0.48 38.19 38.89 8036
NYMEX CRUDE JUL4 103.35 +0.69 102.69 103.44 16223
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 = 3.238 Malaysian ringgit)
($1 = 6.2504 Chinese yuan)
Palm prices have slid more than 10 percent from a May 15 top of 2,630 ringgit to fall to a seven-and-a-half low of 2,375 ringgit in late Tuesday trade, weighed by a strong ringgit, weakness in comparative soy markets overseas, and disappointing export data.
"Low prices are seeing good demand," said a trader with a local commodities brokerage. "However, the pick-up in output will see end-May stocks around 1.87-1.90 million tonnes."
"This factor, combined with global weakness in other competing oils, is putting a lid on prices," the Malaysia-based trader added.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had inched up 1.9 percent to 2,433 ringgit ($751) per tonne by Wednesday's close.
Total traded volume stood at 42,354 lots of 25 tonnes, above the usual 35,000 lots.
Technicals showed palm oil has found support at 2,395 ringgit per tonne and may continue to hover around this level for one more trading session, said Reuters market analyst Wang Tao.
India's new government will not raise duties on palm oil in the short-term, official sources said on Wednesday, despite demands by domestic oilseed processors to cut cheap imports from the world's top palm producer.
A decision to put a hold on any duty increase by India, the world's biggest palm oil buyer, could help reduce bearish sentiment and lend support to global palm prices which have lost more than 8 percent so far this year.
A slightly weaker ringgit also helped stoke buying interest from overseas investors and refiners. The Malaysian ringgit shed 0.2 percent to trade at 3.2355 per dollar on Wednesday.
"A month back we had targeted the ringgit to rise and hit 3.1700-3.1900, but it gained to 3.2015 on May 22 and after that began to depreciate slowly," a Kuala Lumpur-based trader with a local commodities firm said.
"It should provide the undertone support for crude palm oil futures."
Malaysian palm stocks stood at a three-month high of 1.77 million tonnes at end-April, with output volumes hitting thei highest level since December last year.
Some market participants estimate that production of crude palm oil rose again in May, possibly outstripping the increase in exports and adding to stockpiles.
In other markets, Brent crude rose above $109 a barrel on Wednesday, as traders eyed U.S. oil inventory data and looked to euro zone policies that may spur growth and boost the region's energy demand.
In other competing vegetable oil markets, the U.S. soyoil contract for July rose 1.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.3 percent.
Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2440 +40.00 2405 2440 219
MY PALM OIL JUL4 2444 +49.00 2404 2445 3173
MY PALM OIL AUG4 2433 +46.00 2395 2434 19626
CHINA PALM OLEIN SEP4 5814 -2.00 5794 5838 157658
CHINA SOYOIL SEP4 6706 +22.00 6682 6730 207446
CBOT SOY OIL JUL4 38.83 +0.48 38.19 38.89 8036
NYMEX CRUDE JUL4 103.35 +0.69 102.69 103.44 16223
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 = 3.238 Malaysian ringgit)
($1 = 6.2504 Chinese yuan)