MARKET DEVELOPMENT
VEGOILS-Palm Oil Hits 1-Month High on Estimates of Output Fall
VEGOILS-Palm Oil Hits 1-Month High on Estimates of Output Fall
24/08/2013 (Reuters) - Malaysian palm oil futures rose to their highest in more than a month on Friday on growers' estimates showing output fell in August, raising hopes that stocks in the world's No.2 producer will tighten.
Traders said figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that production in Aug. 1-20 had dropped 7.4 percent compared with July. The data was confirmed by the MPOA.
"MPOA's figures are quite friendly because the market was expecting production to increase," said a trader with a foreign commodities brokerage in Malaysia.
By Friday's close, the benchmark November contract on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,369 ringgit ($718) per tonne, the highest level since July 11, recovering from prices in the morning session.
Production had surged 18.2 percent in July, pushing stocks higher for the first time this year to 1.66 million tonnes from 1.65 million in June.
It was expected to continue climbing due to the higher yield cycles that are typical for the second half of the year.
The Malaysian Palm Oil Board will issue official data on August stocks, output and exports on Sept. 10.
Palm oil posted a weekly gain of 2.6 percent, also supported by a fall in the ringgit, which improved margins for overseas buyers.
Total traded volume amounted to 30,820 lots of 25 tonnes each, slightly below the average 35,000 lots.
Technicals showed that signals are mixed for Malaysian palm oil as it struggles around a resistance of 2,356 ringgit per tonne, Reuters markets analyst Wang Tao said.
Prices edged lower earlier in the day down as investors were wary of the potential for a strengthening ringgit and of an export tax cut in Indonesia.
Malaysian palm could face pressure going forward after top producer and rival Indonesia said it would cut its crude palm oil export tax to 9 percent for September from 10.5 percent in August.
This could eat into demand for Malaysian exports, especially from second-largest palm oil buyer China as it stocks up ahead of its Mid-Autumn festival in September.
"Usually China will take up something as the festival approaches. But you notice that Indonesia has cut down its tax, so probably China will get more from there than Malaysia," another Malaysia-based trader added.
In other markets, Brent edged above $110 a barrel on Friday, buoyed by upbeat business surveys that suggested the global economy is on the mend and kindled hopes for higher fuel demand.
In vegetable oil markets, the U.S. soyoil contract for December edged up 0.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange slipped 0.4 percent.
Palm, soy and crude oil prices at 1052 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2420 +17.00 2397 2420 678
MY PALM OIL OCT3 2385 +19.00 2356 2386 5351
MY PALM OIL NOV3 2369 +11.00 2337 2369 17015
CHINA PALM OLEIN JAN4 5550 +24.00 5502 5552 360392
CHINA SOYOIL JAN4 7078 -26.00 7058 7098 594332
CBOT SOY OIL DEC3 42.81 +0.05 42.75 43.00 3797
NYMEX CRUDE OCT3 105.09 +0.06 104.71 105.43 15137
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=3.30 Malaysian ringgit)
Traders said figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that production in Aug. 1-20 had dropped 7.4 percent compared with July. The data was confirmed by the MPOA.
"MPOA's figures are quite friendly because the market was expecting production to increase," said a trader with a foreign commodities brokerage in Malaysia.
By Friday's close, the benchmark November contract on the Bursa Malaysia Derivatives Exchange rose 0.5 percent to 2,369 ringgit ($718) per tonne, the highest level since July 11, recovering from prices in the morning session.
Production had surged 18.2 percent in July, pushing stocks higher for the first time this year to 1.66 million tonnes from 1.65 million in June.
It was expected to continue climbing due to the higher yield cycles that are typical for the second half of the year.
The Malaysian Palm Oil Board will issue official data on August stocks, output and exports on Sept. 10.
Palm oil posted a weekly gain of 2.6 percent, also supported by a fall in the ringgit, which improved margins for overseas buyers.
Total traded volume amounted to 30,820 lots of 25 tonnes each, slightly below the average 35,000 lots.
Technicals showed that signals are mixed for Malaysian palm oil as it struggles around a resistance of 2,356 ringgit per tonne, Reuters markets analyst Wang Tao said.
Prices edged lower earlier in the day down as investors were wary of the potential for a strengthening ringgit and of an export tax cut in Indonesia.
Malaysian palm could face pressure going forward after top producer and rival Indonesia said it would cut its crude palm oil export tax to 9 percent for September from 10.5 percent in August.
This could eat into demand for Malaysian exports, especially from second-largest palm oil buyer China as it stocks up ahead of its Mid-Autumn festival in September.
"Usually China will take up something as the festival approaches. But you notice that Indonesia has cut down its tax, so probably China will get more from there than Malaysia," another Malaysia-based trader added.
In other markets, Brent edged above $110 a barrel on Friday, buoyed by upbeat business surveys that suggested the global economy is on the mend and kindled hopes for higher fuel demand.
In vegetable oil markets, the U.S. soyoil contract for December edged up 0.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange slipped 0.4 percent.
Palm, soy and crude oil prices at 1052 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2420 +17.00 2397 2420 678
MY PALM OIL OCT3 2385 +19.00 2356 2386 5351
MY PALM OIL NOV3 2369 +11.00 2337 2369 17015
CHINA PALM OLEIN JAN4 5550 +24.00 5502 5552 360392
CHINA SOYOIL JAN4 7078 -26.00 7058 7098 594332
CBOT SOY OIL DEC3 42.81 +0.05 42.75 43.00 3797
NYMEX CRUDE OCT3 105.09 +0.06 104.71 105.43 15137
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=3.30 Malaysian ringgit)