MARKET DEVELOPMENT
VEGOILS-Palm Oil Plunges To 2-Month Low on Weak Export Outlook
VEGOILS-Palm Oil Plunges To 2-Month Low on Weak Export Outlook
13/07/2013 (Reuters) - Malaysian palm oil futures plunged more than 3 percent on Friday on investor concern that the weak export picture could stretch into the months ahead, triggering a technical selloff which caused prices to fall to their lowest in more than two months.
Traders were also cautious ahead of export data for the first 15 days of July due next Monday. Although some said the figures might improve slightly, palm faces pressure in the second half of the year as top buyers are expected to curb purchases due to economic uncertainty.
Palm oil exports for July 1-10 slid 16 percent, surprising investors who had expected demand to be supported by last minute buying for the Muslim festival of Ramadan.
An uptick in production data from industry regulator the Malaysian Palm Oil Board (MPOB) signalled the start of a higher yield cycle for the tropical plant. Stocks in Malaysia, the world's No.2 producer, fell to a more than two-year low of 1.61 million tonnes in June as demand outstripped supply.
"The market broke the recent low of 2,324 ringgit and caused prices to fall lower. At the same time, there were long liquidations taking place. Everything pulled the market down technically," a trader at a foreign commodities brokerage in Kuala Lumpur said.
"Traders are looking ahead. The festive demand is moving away, China and India are trying to hold back buying. China's economic data does not look good, while Indian rupees are trading at a low, making it more expensive to buy palm oil," the trader added.
By Friday's close, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had slid 3.0 percent to 2,300 ringgit ($724) per tonne, the lowest since May 16. Prices have fallen for three straight sessions and notched up a weekly loss of 3.6 percent.
Total traded volume stood at 47,941 lots of 25 tonnes each, higher than the usual 35,000 lots as traders hedged positions. Prices traded between 2,359-2,295 ringgit.
Technicals showed palm oil is expected to drop to 2,336 ringgit per tonne, as it has broken below support at 2,361 ringgit, Reuters market analyst Wang Tao said.
The U.S. dollar slid on Thursday after the Federal Reserve signalled it may not be as close to cutting its stimulus as markets had begun to expect. A weaker greenback against the ringgit makes the feedstock more expensive for overseas buyers and refiners.
In other markets, oil held steady below $108 a barrel on Friday, as concern about China's demand outlook and the prospect of growing non-OPEC supply offset lower inventories in the United States and concern about possible disruption to flows due to strife in Egypt.
In vegetable oil markets, U.S. soyoil for December fell 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 0.9 percent
Palm, soy and crude oil prices at 1039 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL3 2332 -58.00 2330 2332 5
MY PALM OIL AUG3 2310 -72.00 2308 2369 3039
MY PALM OIL SEP3 2300 -72.00 2295 2358 23088
CHINA PALM OLEIN JAN4 5818 -112.00 5806 5916 583298
CHINA SOYOIL JAN4 7282 -66.00 7266 7330 690708
CBOT SOY OIL DEC3 45.55 -0.15 45.49 45.99 6037
NYMEX CRUDE AUG3 104.70 -0.21 104.36 104.98 19910
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=3.177 ringgit)
Traders were also cautious ahead of export data for the first 15 days of July due next Monday. Although some said the figures might improve slightly, palm faces pressure in the second half of the year as top buyers are expected to curb purchases due to economic uncertainty.
Palm oil exports for July 1-10 slid 16 percent, surprising investors who had expected demand to be supported by last minute buying for the Muslim festival of Ramadan.
An uptick in production data from industry regulator the Malaysian Palm Oil Board (MPOB) signalled the start of a higher yield cycle for the tropical plant. Stocks in Malaysia, the world's No.2 producer, fell to a more than two-year low of 1.61 million tonnes in June as demand outstripped supply.
"The market broke the recent low of 2,324 ringgit and caused prices to fall lower. At the same time, there were long liquidations taking place. Everything pulled the market down technically," a trader at a foreign commodities brokerage in Kuala Lumpur said.
"Traders are looking ahead. The festive demand is moving away, China and India are trying to hold back buying. China's economic data does not look good, while Indian rupees are trading at a low, making it more expensive to buy palm oil," the trader added.
By Friday's close, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had slid 3.0 percent to 2,300 ringgit ($724) per tonne, the lowest since May 16. Prices have fallen for three straight sessions and notched up a weekly loss of 3.6 percent.
Total traded volume stood at 47,941 lots of 25 tonnes each, higher than the usual 35,000 lots as traders hedged positions. Prices traded between 2,359-2,295 ringgit.
Technicals showed palm oil is expected to drop to 2,336 ringgit per tonne, as it has broken below support at 2,361 ringgit, Reuters market analyst Wang Tao said.
The U.S. dollar slid on Thursday after the Federal Reserve signalled it may not be as close to cutting its stimulus as markets had begun to expect. A weaker greenback against the ringgit makes the feedstock more expensive for overseas buyers and refiners.
In other markets, oil held steady below $108 a barrel on Friday, as concern about China's demand outlook and the prospect of growing non-OPEC supply offset lower inventories in the United States and concern about possible disruption to flows due to strife in Egypt.
In vegetable oil markets, U.S. soyoil for December fell 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 0.9 percent
Palm, soy and crude oil prices at 1039 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL3 2332 -58.00 2330 2332 5
MY PALM OIL AUG3 2310 -72.00 2308 2369 3039
MY PALM OIL SEP3 2300 -72.00 2295 2358 23088
CHINA PALM OLEIN JAN4 5818 -112.00 5806 5916 583298
CHINA SOYOIL JAN4 7282 -66.00 7266 7330 690708
CBOT SOY OIL DEC3 45.55 -0.15 45.49 45.99 6037
NYMEX CRUDE AUG3 104.70 -0.21 104.36 104.98 19910
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=3.177 ringgit)