MARKET DEVELOPMENT
VEGOILS-Palm Drops on Record Soy Crop Outlook, Weak ringgit Curbs Losses
VEGOILS-Palm Drops on Record Soy Crop Outlook, Weak ringgit Curbs Losses
30/07/2013 (Reuters) - Malaysian palm oil futures edged down on Monday as investors worried about potential bumper soy crops lifting global edible oil supplies, but a weaker local currency curbed losses.
Prices plunged to an almost four-year low last week amid projections that ideal weather in the U.S. Midwest could pave the way for a record soybean harvest, which would boost soyoil supplies and shift demand away from competing palm.
U.S. soybean, which is typically tracked by palm, slid to their lowest in more than a year on Monday as buyers cut purchases of old-crop supplies on the prospect of the record harvest and cheaper prices.
But the ringgit weakened against the dollar, checking palm oil losses and keeping them in a 2,162-2,190 ringgit range.
"The palm market is lacklustre, and overseas markets do not look good, but the supporting factor is the weakening ringgit. So palm has conflicting signals," said a trader with a foreign commodities brokerage in Malaysia.
"Most commodities globally - soft commodities, the grain complex, precious metals - are down. I don't see any reason why palm oil would be spared."
By Monday's close, the benchmark October contract on the Bursa Malaysia Derivatives Exchange had edged down 0.6 percent to 2,171 ringgit ($673) per tonne.
Total traded volume stood at 44,346 lots of 25 tonnes each, higher than the average 35,000 lots.
Technicals showed palm oil is expected to retest support at 2,136 ringgit per tonne, with a good chance of breaking this level and falling more towards 2,097 ringgit, Reuters market analyst Wang Tao said.
A rise in global oilseed supplies does not bode well for palm as it struggles with slackening demand from top consumers India and China. Exports in July 1-25 fell 6-7 percent compared to a month ago, cargo surveyors said last Thursday.
But while exports for the whole month of July, due on Wednesday, could fall, declines are expected to be less steep than initially estimated.
"There should still be a drawdown in exports for the whole month of July, but it won't be as bad as earlier anticipated," the trader added.
In other markets, Brent crude slipped towards $107 a barrel amid concerns over demand growth, although a weak dollar and fears about supply disruptions kept losses in check.
In vegetable oil markets, the U.S. soyoil contract for December fell 0.9 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
Palm, soy and crude oil prices at 1006 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG3 2250 -10.00 2250 2290 70
MY PALM OIL SEP3 2216 -2.00 2208 2231 9696
MY PALM OIL OCT3 2171 -12.00 2162 2190 21931
CHINA PALM OLEIN JAN4 5356 -62.00 5354 5408 303176
CHINA SOYOIL JAN4 6990 -40.00 6968 7016 511562
CBOT SOY OIL DEC3 43.37 -0.36 43.31 43.77 4913
NYMEX CRUDE SEP3 104.55 -0.15 103.87 104.89 27417
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
Prices plunged to an almost four-year low last week amid projections that ideal weather in the U.S. Midwest could pave the way for a record soybean harvest, which would boost soyoil supplies and shift demand away from competing palm.
U.S. soybean, which is typically tracked by palm, slid to their lowest in more than a year on Monday as buyers cut purchases of old-crop supplies on the prospect of the record harvest and cheaper prices.
But the ringgit weakened against the dollar, checking palm oil losses and keeping them in a 2,162-2,190 ringgit range.
"The palm market is lacklustre, and overseas markets do not look good, but the supporting factor is the weakening ringgit. So palm has conflicting signals," said a trader with a foreign commodities brokerage in Malaysia.
"Most commodities globally - soft commodities, the grain complex, precious metals - are down. I don't see any reason why palm oil would be spared."
By Monday's close, the benchmark October contract on the Bursa Malaysia Derivatives Exchange had edged down 0.6 percent to 2,171 ringgit ($673) per tonne.
Total traded volume stood at 44,346 lots of 25 tonnes each, higher than the average 35,000 lots.
Technicals showed palm oil is expected to retest support at 2,136 ringgit per tonne, with a good chance of breaking this level and falling more towards 2,097 ringgit, Reuters market analyst Wang Tao said.
A rise in global oilseed supplies does not bode well for palm as it struggles with slackening demand from top consumers India and China. Exports in July 1-25 fell 6-7 percent compared to a month ago, cargo surveyors said last Thursday.
But while exports for the whole month of July, due on Wednesday, could fall, declines are expected to be less steep than initially estimated.
"There should still be a drawdown in exports for the whole month of July, but it won't be as bad as earlier anticipated," the trader added.
In other markets, Brent crude slipped towards $107 a barrel amid concerns over demand growth, although a weak dollar and fears about supply disruptions kept losses in check.
In vegetable oil markets, the U.S. soyoil contract for December fell 0.9 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
Palm, soy and crude oil prices at 1006 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG3 2250 -10.00 2250 2290 70
MY PALM OIL SEP3 2216 -2.00 2208 2231 9696
MY PALM OIL OCT3 2171 -12.00 2162 2190 21931
CHINA PALM OLEIN JAN4 5356 -62.00 5354 5408 303176
CHINA SOYOIL JAN4 6990 -40.00 6968 7016 511562
CBOT SOY OIL DEC3 43.37 -0.36 43.31 43.77 4913
NYMEX CRUDE SEP3 104.55 -0.15 103.87 104.89 27417
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