MARKET DEVELOPMENT
Palm Oil Slips Slightly After Reaching 20-Month High
Palm Oil Slips Slightly After Reaching 20-Month High
29/01/2016 (Reuters) - Malaysian palm oil futures slipped slightly on Thursday after rising to a 20-month high earlier in the session on expectations of lower production and shrinking inventories.
The palm oil contract for April on the Bursa Malaysia Derivatives Exchange fell 0.2% to RM2,499 (US$592.88) per tonne at the midday break after hitting an intraday high of RM2,512, the most since May 28, 2014.
Traded volume stood at 15,734 lots of 25 tonnes each.
"We were up for the fourth consecutive day, so it's a norm to observe some correction, but the point to note is production is expected to go down for three months now, and the talk is end-stocks may reduce to 2.1 million," said a trader from Kuala Lumpur-based brokerage firm.
Production for the tropical oil from top producers Indonesia and Malaysia is expected to decline this year due to the El Nino's dry weather effects.
The El Nino weather phenomenon brings heavy rains across South America but scorching heat in Southeast Asia, impacting palm's fresh fruit yields and lowering output.
Malaysia's palm output is only expected to rise 0.7% this year, while Indonesian production is seen at 35 million tonnes from 32.5 million tonnes in 2015.
Stockpiles in Malaysia as of end-December were at 2.6 million tonnes, down from an all-time high of 2.9 million tonnes a month ago.
Palm oil may edge up to RM2,535 per tonne, as it has cleared a resistance at RM2,495, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related markets, crude oil prices dropped over 1% to erode gains made on worries of Russia cooperating with OPEC to control global supplies.
The US March soyoil contract was down 0.1%, while the May soybean oil contract on the Dalian Commodity Exchange rose 0.3%.
The palm oil contract for April on the Bursa Malaysia Derivatives Exchange fell 0.2% to RM2,499 (US$592.88) per tonne at the midday break after hitting an intraday high of RM2,512, the most since May 28, 2014.
Traded volume stood at 15,734 lots of 25 tonnes each.
"We were up for the fourth consecutive day, so it's a norm to observe some correction, but the point to note is production is expected to go down for three months now, and the talk is end-stocks may reduce to 2.1 million," said a trader from Kuala Lumpur-based brokerage firm.
Production for the tropical oil from top producers Indonesia and Malaysia is expected to decline this year due to the El Nino's dry weather effects.
The El Nino weather phenomenon brings heavy rains across South America but scorching heat in Southeast Asia, impacting palm's fresh fruit yields and lowering output.
Malaysia's palm output is only expected to rise 0.7% this year, while Indonesian production is seen at 35 million tonnes from 32.5 million tonnes in 2015.
Stockpiles in Malaysia as of end-December were at 2.6 million tonnes, down from an all-time high of 2.9 million tonnes a month ago.
Palm oil may edge up to RM2,535 per tonne, as it has cleared a resistance at RM2,495, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.
In related markets, crude oil prices dropped over 1% to erode gains made on worries of Russia cooperating with OPEC to control global supplies.
The US March soyoil contract was down 0.1%, while the May soybean oil contract on the Dalian Commodity Exchange rose 0.3%.
Palm, soy and crude oil prices at 0614 GMT
| Contract | Month | Last | Change | Low | High | Volume |
| MY PALM OIL | FEB6 | 2420 | +8.00 | 2418 | 2420 | 27 |
| MY PALM OIL | MAR6 | 2475 | +0.00 | 2471 | 2488 | 1698 |
| MY PALM OIL | APR6 | 2499 | -4.00 | 2496 | 2512 | 9374 |
| CHINA PALM OLEIN | MAY6 | 4754 | +40.00 | 4734 | 4772 | 815356 |
| CHINA SOYOIL | MAY6 | 5636 | +18.00 | 5620 | 5660 | 478082 |
| CBOT SOY OIL | MAR6 | 30.84 | -0.10 | 30.79 | 30.91 | 3226 |
| INDIA PALM OIL | JAN6 | 433.50 | +0.10 | 433.20 | 434.50 | 182 |
| INDIA SOYOIL | FEB6 | 616.00 | +3.90 | 612.20 | 617.70 | 15170 |
| NYMEX CRUDE | MAR6 | 32.03 | -0.27 | 31.78 | 32.37 | 21532 |
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel
(US$1 = RM4.2150)
(US$1 = 68.0850 Indian rupees)
(US$1 = 6.5764 Chinese yuan)