MARKET DEVELOPMENT
VEGOILS-Palm Oil Ends Off 2-Month High, Tighter Stocks Support
VEGOILS-Palm Oil Ends Off 2-Month High, Tighter Stocks Support
30/05/2013 (Reuters) - Malaysian palm oil futures ended off two-month highs on Wednesday and notched five straight sessions of gains, as investors expect tight supplies to whittle down stocks in the world's No.2 producer of the tropical oil.
Palm oil inventories in Malaysia now stand at 1.93 million tonnes, having dipped below the key psychological level of 2 million tonnes at the end of April. Despite softer exports, investors expect May's output to be near-stagnant and help further trim stocks.
Market players are also pinning hopes on a pickup in demand ahead of the Muslim fasting month of Ramadan, which falls in July, as buyers restock.
"Tight nearby supplies and short-covering are playing into palm oil prices," said a trader with a domestic commodities brokerage.
However, palm oil futures could head into a correction before rising again next month, the trader cautioned.
"The faltering basis reinforces notions that futures are over-priced vis-à-vis palm oil fundamentals. We anticipate a mild correction before another rally towards 2,400 to 2,500 ringgit by end-June 2013."
The benchmark August contract on the Bursa Malaysia Derivatives Exchange hit 2,420 ringgit ($791) per tonne in early trade, its highest since March 28. It later gave up some gains to settle at 2,399 ringgit for a rise of 0.5 percent.
Total traded volumes stood at 35,262 lots of 25 tonnes each, higher than the average of 25,000 lots, as traders hedged positions.
Technicals showed palm oil was expected to rise into a range of 2,446 to 2,457 ringgit per tonne, as indicated by an inverted head-and-shoulders and a Fibonacci projection analysis, Reuters market analyst Wang Tao said.
Exports of Malaysian palm oil products fell between 2 percent and 5 percent in the first 25 days of May from a month ago, weighed down by weaker Chinese demand. But the decline was less than in the first 20 days, cargo surveyor data showed.
Total exports for May will be released on Friday.
In other markets, Brent crude futures steadied on Wednesday near a one-week high above $104 per barrel, as upbeat U.S. housing and consumer confidence data sparked expectations of improved demand from the world's top consumer.
In vegetable oil markets, Chicago soyoil for July delivery dropped 0.1 percent in late Asian trade after making gains earlier on rainy conditions slowing soybean planting in the the U.S.
The most-active September soybean oil contract on the Dalian Commodities Exchange ended up 0.5 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN3 2359 -13.00 2359 2398 308
MY PALM OIL JUL3 2400 +7.00 2397 2420 4164
MY PALM OIL AUG3 2399 +11.00 2396 2420 19442
CHINA PALM OLEIN SEP3 6200 +40.00 6162 6254 536738
CHINA SOYOIL SEP3 7540 +40.00 7508 7620 954998
CBOT SOY OIL JUL3 49.50 -0.04 49.34 49.89 5276
NYMEX CRUDE JUL3 94.60 -0.41 94.14 95.11 23459
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=3.059 ringgit)
Palm oil inventories in Malaysia now stand at 1.93 million tonnes, having dipped below the key psychological level of 2 million tonnes at the end of April. Despite softer exports, investors expect May's output to be near-stagnant and help further trim stocks.
Market players are also pinning hopes on a pickup in demand ahead of the Muslim fasting month of Ramadan, which falls in July, as buyers restock.
"Tight nearby supplies and short-covering are playing into palm oil prices," said a trader with a domestic commodities brokerage.
However, palm oil futures could head into a correction before rising again next month, the trader cautioned.
"The faltering basis reinforces notions that futures are over-priced vis-à-vis palm oil fundamentals. We anticipate a mild correction before another rally towards 2,400 to 2,500 ringgit by end-June 2013."
The benchmark August contract on the Bursa Malaysia Derivatives Exchange hit 2,420 ringgit ($791) per tonne in early trade, its highest since March 28. It later gave up some gains to settle at 2,399 ringgit for a rise of 0.5 percent.
Total traded volumes stood at 35,262 lots of 25 tonnes each, higher than the average of 25,000 lots, as traders hedged positions.
Technicals showed palm oil was expected to rise into a range of 2,446 to 2,457 ringgit per tonne, as indicated by an inverted head-and-shoulders and a Fibonacci projection analysis, Reuters market analyst Wang Tao said.
Exports of Malaysian palm oil products fell between 2 percent and 5 percent in the first 25 days of May from a month ago, weighed down by weaker Chinese demand. But the decline was less than in the first 20 days, cargo surveyor data showed.
Total exports for May will be released on Friday.
In other markets, Brent crude futures steadied on Wednesday near a one-week high above $104 per barrel, as upbeat U.S. housing and consumer confidence data sparked expectations of improved demand from the world's top consumer.
In vegetable oil markets, Chicago soyoil for July delivery dropped 0.1 percent in late Asian trade after making gains earlier on rainy conditions slowing soybean planting in the the U.S.
The most-active September soybean oil contract on the Dalian Commodities Exchange ended up 0.5 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN3 2359 -13.00 2359 2398 308
MY PALM OIL JUL3 2400 +7.00 2397 2420 4164
MY PALM OIL AUG3 2399 +11.00 2396 2420 19442
CHINA PALM OLEIN SEP3 6200 +40.00 6162 6254 536738
CHINA SOYOIL SEP3 7540 +40.00 7508 7620 954998
CBOT SOY OIL JUL3 49.50 -0.04 49.34 49.89 5276
NYMEX CRUDE JUL3 94.60 -0.41 94.14 95.11 23459
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=3.059 ringgit)