MARKET DEVELOPMENT
VEGOILS-Palm Rises for 4th Day, Lifted By Firm Crude Oil
VEGOILS-Palm Rises for 4th Day, Lifted By Firm Crude Oil
18/06/2014 (Reuters) - Malaysian palm oil futures stretched gains into a fourth session on Tuesday, lifted by firm crude oil prices and concerns that the onset of dry weather could curb palm yields, although poor export data dragged on prices.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange had edged up 0.1 percent to 2,431 ringgit ($754) per tonne by Tuesday's close, with prices swinging between 2,413-2,453 ringgit during the session.
Total traded volume stood at 36,754 lots of 25 tonnes, above the average 35,000 lots.
"It is now feasible for biodiesel producers to use palm for biodiesel. If crude moves down below $103 then the attraction won't be there, but at the moment it definitely is," said a trader with a foreign commodities brokerage.
Oil futures dipped towards $112 per barrel on Tuesday, with investors booking profits after a rapid spike in prices, but market players saw scope for further gains if violence in Iraq threatened production from OPEC's second-biggest producer.
Firm crude makes palm oil a more attractive feedstock option to produce biodiesel.
Benchmark palm prices were also supported by worries there would be drought if El Nino emerges in Southeast Asia, where most of the world's palm oil is cultivated. Hot and dry weather hinders growth of the tropical palm fruit.
"We are a bit worried about the weather. El Nino is very likely going to happen ... if you look at the weather condition, it will be hotter than what we experienced early in the year," the Kuala Lumpur-based trader added.
Poor export data for the first half of June, however, put a lid on gains.
Cargo surveyors reported that exports of Malaysian palm oil products fell about 8 percent to 587,000-590,000 tonnes compared with the same period a month ago, due to weaker demand from Europe and China.
But some market participants say prospects of slowing exports have already been taken into account, and that prices could be lifted by a bout of technical buying following the drop to an eight-month low last week.
"Overall, the market is anticipating exports for this month to be slightly unchanged or see a 3-5 percent drop (from May)," said another Kuala Lumpur-based trader.
"Slow exports means that eventually stocks will build up.
But that has already been factored in. The market is moving higher for a technical correction," the trader added.
In other competing vegetable oil markets, the U.S. soyoil contract lost 0.1 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.6 percent.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2444 +4.00 2423 2461 1057
MY PALM OIL AUG4 2436 +4.00 2417 2457 8293
MY PALM OIL SEP4 2431 +3.00 2413 2453 17529
CHINA PALM OLEIN SEP4 5796 -44.00 5748 5812 276502
CHINA SOYOIL JAN5 6836 -42.00 6808 6864 397320
CBOT SOY OIL JUL4 39.47 -0.03 39.25 39.58 3987
NYMEX CRUDE JUL4 106.46 -0.44 106.01 106.84 17931
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 = 3.2205 Malaysian ringgit)
($1 = 6.2269 Chinese yuan)
The benchmark September contract on the Bursa Malaysia Derivatives Exchange had edged up 0.1 percent to 2,431 ringgit ($754) per tonne by Tuesday's close, with prices swinging between 2,413-2,453 ringgit during the session.
Total traded volume stood at 36,754 lots of 25 tonnes, above the average 35,000 lots.
"It is now feasible for biodiesel producers to use palm for biodiesel. If crude moves down below $103 then the attraction won't be there, but at the moment it definitely is," said a trader with a foreign commodities brokerage.
Oil futures dipped towards $112 per barrel on Tuesday, with investors booking profits after a rapid spike in prices, but market players saw scope for further gains if violence in Iraq threatened production from OPEC's second-biggest producer.
Firm crude makes palm oil a more attractive feedstock option to produce biodiesel.
Benchmark palm prices were also supported by worries there would be drought if El Nino emerges in Southeast Asia, where most of the world's palm oil is cultivated. Hot and dry weather hinders growth of the tropical palm fruit.
"We are a bit worried about the weather. El Nino is very likely going to happen ... if you look at the weather condition, it will be hotter than what we experienced early in the year," the Kuala Lumpur-based trader added.
Poor export data for the first half of June, however, put a lid on gains.
Cargo surveyors reported that exports of Malaysian palm oil products fell about 8 percent to 587,000-590,000 tonnes compared with the same period a month ago, due to weaker demand from Europe and China.
But some market participants say prospects of slowing exports have already been taken into account, and that prices could be lifted by a bout of technical buying following the drop to an eight-month low last week.
"Overall, the market is anticipating exports for this month to be slightly unchanged or see a 3-5 percent drop (from May)," said another Kuala Lumpur-based trader.
"Slow exports means that eventually stocks will build up.
But that has already been factored in. The market is moving higher for a technical correction," the trader added.
In other competing vegetable oil markets, the U.S. soyoil contract lost 0.1 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.6 percent.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2444 +4.00 2423 2461 1057
MY PALM OIL AUG4 2436 +4.00 2417 2457 8293
MY PALM OIL SEP4 2431 +3.00 2413 2453 17529
CHINA PALM OLEIN SEP4 5796 -44.00 5748 5812 276502
CHINA SOYOIL JAN5 6836 -42.00 6808 6864 397320
CBOT SOY OIL JUL4 39.47 -0.03 39.25 39.58 3987
NYMEX CRUDE JUL4 106.46 -0.44 106.01 106.84 17931
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 = 3.2205 Malaysian ringgit)
($1 = 6.2269 Chinese yuan)