MARKET DEVELOPMENT
VEGOILS-Palm Oil Hits One-Week Low on High Output Worries
VEGOILS-Palm Oil Hits One-Week Low on High Output Worries
08/08/2013 (Reuters) - Palm oil futures dropped to their lowest in more than a week on Wednesday on market talk that production growth in Malaysia was significantly higher last month, stoking concerns about a potential build up in stocks.
Traders and analysts said a group of planters in the world's No.2 palm oil producing country had forecast output to have risen by 19 percent in July to 1.68 million tonnes - compared to a Reuters poll for a 10 percent rise.
This fanned concerns the production jump could outstrip resilient export demand, weighing on palm oil prices that have fallen more than 9 percent so far this year.
The Malaysian Palm Oil Board will issue official July data on Aug. 14.
"Everyone is rushing to cut positions. The production estimates privately circulated by the Malaysian Palm Oil Association has made many take the step to reduce exposure before the holiday begins," said a trader with a foreign commodities brokerage.
The Malaysian Palm Oil Association could not be immediately reached for a comment.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange dropped almost 2 percent to a low of 2,201 ringgit ($680) per tonne -- the weakest since July 30. It closed at 2,210 ringgit for the day.
Total traded volume stood at 22,981 lots of 25 tonnes each, above the average 17,500 lots.
The market will be closed from the afternoon session of Aug. 7 and will re-open on Aug. 12. Markets in Indonesia, the world's largest palm oil producer, are closed this week.
Technicals were bearish. Reuters analyst Wang Tao said palm oil is expected to revisit its July 26 low of 2,137 ringgit as it has resumed its preceding downtrend.
Sharp overnight drops in competing soyoil in Chicago markets also weighed on palm oil futures. On Tuesday, the Commodity Weather Group said cool temperatures in the U.S. Midwest into mid-August will enhance soybean yield prospects.
This could build the case for a record soybean crop, which will replenish historically low soy supplies and yield more soyoil, narrowing the edible oil's global premium to palm oil and grabbing demand.
The U.S. Department of Agriculture will release updated production data on Aug 12.
The U.S. soyoil contract for December dropped 0.5 percent. The most-active January soybean oil contract on the Dalian Commodities Exchange tumbled 1.5 percent.
In other markets, Brent crude slipped towards $108, dropping for a fourth straight day, as supply worries eased and on caution ahead of data from China and the United States, the world's two top oil consumers.
Palm, soy and crude oil prices at 0434 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG3 2280 -33.00 2280 2280 240
MY PALM OIL SEP3 2240 -31.00 2233 2261 2955
MY PALM OIL OCT3 2210 -34.00 2201 2232 11052
CHINA PALM OLEIN JAN4 5332 -108.00 5330 5406 269078
CHINA SOYOIL JAN4 6914 -106.00 6910 6978 480260
CBOT SOY OIL DEC3 42.40 -0.19 42.36 42.82 2743
NYMEX CRUDE SEP3 105.35 +0.05 105.30 105.71 5431
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 = 3.2475 Malaysian ringgit)
Traders and analysts said a group of planters in the world's No.2 palm oil producing country had forecast output to have risen by 19 percent in July to 1.68 million tonnes - compared to a Reuters poll for a 10 percent rise.
This fanned concerns the production jump could outstrip resilient export demand, weighing on palm oil prices that have fallen more than 9 percent so far this year.
The Malaysian Palm Oil Board will issue official July data on Aug. 14.
"Everyone is rushing to cut positions. The production estimates privately circulated by the Malaysian Palm Oil Association has made many take the step to reduce exposure before the holiday begins," said a trader with a foreign commodities brokerage.
The Malaysian Palm Oil Association could not be immediately reached for a comment.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange dropped almost 2 percent to a low of 2,201 ringgit ($680) per tonne -- the weakest since July 30. It closed at 2,210 ringgit for the day.
Total traded volume stood at 22,981 lots of 25 tonnes each, above the average 17,500 lots.
The market will be closed from the afternoon session of Aug. 7 and will re-open on Aug. 12. Markets in Indonesia, the world's largest palm oil producer, are closed this week.
Technicals were bearish. Reuters analyst Wang Tao said palm oil is expected to revisit its July 26 low of 2,137 ringgit as it has resumed its preceding downtrend.
Sharp overnight drops in competing soyoil in Chicago markets also weighed on palm oil futures. On Tuesday, the Commodity Weather Group said cool temperatures in the U.S. Midwest into mid-August will enhance soybean yield prospects.
This could build the case for a record soybean crop, which will replenish historically low soy supplies and yield more soyoil, narrowing the edible oil's global premium to palm oil and grabbing demand.
The U.S. Department of Agriculture will release updated production data on Aug 12.
The U.S. soyoil contract for December dropped 0.5 percent. The most-active January soybean oil contract on the Dalian Commodities Exchange tumbled 1.5 percent.
In other markets, Brent crude slipped towards $108, dropping for a fourth straight day, as supply worries eased and on caution ahead of data from China and the United States, the world's two top oil consumers.
Palm, soy and crude oil prices at 0434 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG3 2280 -33.00 2280 2280 240
MY PALM OIL SEP3 2240 -31.00 2233 2261 2955
MY PALM OIL OCT3 2210 -34.00 2201 2232 11052
CHINA PALM OLEIN JAN4 5332 -108.00 5330 5406 269078
CHINA SOYOIL JAN4 6914 -106.00 6910 6978 480260
CBOT SOY OIL DEC3 42.40 -0.19 42.36 42.82 2743
NYMEX CRUDE SEP3 105.35 +0.05 105.30 105.71 5431
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 = 3.2475 Malaysian ringgit)