MARKET DEVELOPMENT
VEGOILS-Palm Oil Falls on Demand Worries, Weak Soyoil
VEGOILS-Palm Oil Falls on Demand Worries, Weak Soyoil
06/06/2014 (Reuters) - Malaysian palm oil futures fell on Thursday, giving up gains in early trade to fall in nine out of 10 sessions as worries about dwindling demand and losses in overseas soy markets weighed.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had touched a near one-week high of 2,449 ringgit before settling lower at 2,416 ringgit ($749) per tonne by the day's close, down 0.7 percent.
Market players say the slower export growth in the second half of May has fuelled concerns that demand for the tropical oil will continue to slacken in June, adding pressure on prices which have lost nearly 10 percent this year.
"In the last five days of May we already started seeing poor
exports. So, we are expecting nothing great in the first 10 days of June," said a trader with a local commodities brokerage in Kuala Lumpur.
Total traded volume stood at 30,534 lots of 25 tonnes on Thursday, below the usual 35,000 lots as some investors stayed on the sidelines and avoided risky bets for now.
"People are waiting for next week's MPOB data and the export data to decide," the trader added.
A Reuters survey on Thursday showed that Malaysian palm oil stocks at end-May likely edged up 2.4 percent to a four-month high of 1.81 million tonnes, as a rise in production outstripped export demand for the tropical oil.
Export data on shipments of Malaysian palm products between June 1 and 10 will be released by cargo surveyors next Tuesday, alongside industry data on Malaysia's end-May palm stocks, output and exports.
Cargo surveyor data earlier this week showed that Malaysian palm exports were 8-9 percent higher in May from a month ago.
The rise, however, was slower compared to a 23 percent jump recorded for the May 1-15 period as export demand fizzled out in the second half of the month.
Technicals were bearish. Palm oil may retrace to 2,395 ringgit per tonne, as it failed to break a resistance at 2,446 ringgit, said Reuters market analyst Wang Tao.
In competing vegetable oil markets, the U.S. soyoil contract for July shed 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.6 percent.
Palm typically tracks soybean oil, a common substitute.
Weaker soybean oil prices narrow palm oil's discount, and could potentially channel food and fuel demand away.
The Malaysian ringgit strengthened on Thursday, eroding margins for overseas investors and refiners looking to buy the ringgit-priced palm feedstock.
The ringgit was up 0.34 percent at 3.2275 per dollar in late trade, gaining alongside most emerging Asian currencies on hopes of more inflows for higher yields as the European Central Bank is expected to ease monetary policy later in the day.
In other markets, oil fell to a three-week low below $108 a barrel as worries about risks to supply caused by violence in Ukraine eased on hopes that talks could resolve the situation.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2423 -17.00 2410 2424 21
MY PALM OIL JUL4 2425 -18.00 2411 2460 1609
MY PALM OIL AUG4 2416 -16.00 2402 2449 15760
CHINA PALM OLEIN SEP4 5844 +30.00 5844 5908 261946
CHINA SOYOIL SEP4 6748 +38.00 6744 6782 244130
CBOT SOY OIL JUL4 38.92 -0.33 38.92 39.26 7581
NYMEX CRUDE JUL4 102.30 -0.34 102.12 102.47 13678
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 = 3.2275 Malaysian ringgit)
($1 = 6.2548 Chinese yuan)
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had touched a near one-week high of 2,449 ringgit before settling lower at 2,416 ringgit ($749) per tonne by the day's close, down 0.7 percent.
Market players say the slower export growth in the second half of May has fuelled concerns that demand for the tropical oil will continue to slacken in June, adding pressure on prices which have lost nearly 10 percent this year.
"In the last five days of May we already started seeing poor
exports. So, we are expecting nothing great in the first 10 days of June," said a trader with a local commodities brokerage in Kuala Lumpur.
Total traded volume stood at 30,534 lots of 25 tonnes on Thursday, below the usual 35,000 lots as some investors stayed on the sidelines and avoided risky bets for now.
"People are waiting for next week's MPOB data and the export data to decide," the trader added.
A Reuters survey on Thursday showed that Malaysian palm oil stocks at end-May likely edged up 2.4 percent to a four-month high of 1.81 million tonnes, as a rise in production outstripped export demand for the tropical oil.
Export data on shipments of Malaysian palm products between June 1 and 10 will be released by cargo surveyors next Tuesday, alongside industry data on Malaysia's end-May palm stocks, output and exports.
Cargo surveyor data earlier this week showed that Malaysian palm exports were 8-9 percent higher in May from a month ago.
The rise, however, was slower compared to a 23 percent jump recorded for the May 1-15 period as export demand fizzled out in the second half of the month.
Technicals were bearish. Palm oil may retrace to 2,395 ringgit per tonne, as it failed to break a resistance at 2,446 ringgit, said Reuters market analyst Wang Tao.
In competing vegetable oil markets, the U.S. soyoil contract for July shed 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.6 percent.
Palm typically tracks soybean oil, a common substitute.
Weaker soybean oil prices narrow palm oil's discount, and could potentially channel food and fuel demand away.
The Malaysian ringgit strengthened on Thursday, eroding margins for overseas investors and refiners looking to buy the ringgit-priced palm feedstock.
The ringgit was up 0.34 percent at 3.2275 per dollar in late trade, gaining alongside most emerging Asian currencies on hopes of more inflows for higher yields as the European Central Bank is expected to ease monetary policy later in the day.
In other markets, oil fell to a three-week low below $108 a barrel as worries about risks to supply caused by violence in Ukraine eased on hopes that talks could resolve the situation.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2423 -17.00 2410 2424 21
MY PALM OIL JUL4 2425 -18.00 2411 2460 1609
MY PALM OIL AUG4 2416 -16.00 2402 2449 15760
CHINA PALM OLEIN SEP4 5844 +30.00 5844 5908 261946
CHINA SOYOIL SEP4 6748 +38.00 6744 6782 244130
CBOT SOY OIL JUL4 38.92 -0.33 38.92 39.26 7581
NYMEX CRUDE JUL4 102.30 -0.34 102.12 102.47 13678
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 = 3.2275 Malaysian ringgit)
($1 = 6.2548 Chinese yuan)