MARKET DEVELOPMENT
VEGOILS-US Hot Spell Boosts Palm To More Than 2-Mth High
VEGOILS-US Hot Spell Boosts Palm To More Than 2-Mth High
27/08/2013 (Reuters) - Malaysian palm oil futures surged to their highest in more than two months on Monday as a hot spell in the U.S. Midwest threatened to curb soybean yields and signalled tighter global edible oil supplies.
Chicago soybeans climbed to an 11-month high as hot and dry weather in the U.S. grain belt prompted a farm advisory to trim its soy harvest outlook, lending strength to palm oil which is a close substitute of soybean oil.
The U.S. soyoil contract for December rose 3.1 percent in late Asian trade while the most-active January soybean oil contract on the Dalian Commodities Exchange climbed 4.0 percent.
A smaller amount of soybeans for crushing could shift demand to rival palm oil, which is commonly used in products ranging from chocolate to shower creams.
"It's purely a 'weather-market' now in the United States and palm oil is getting a free ride from this factor," said a trader with a foreign commodities brokerage in Malaysia.
"Palm today is very strong on the back of the U.S. weather and the fear of the heat wave," the trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange rose 3.5 percent to 2,451 ringgit ($740) per tonne in early trade, the highest since June 20.
Prices eased slightly to close at 2,433 ringgit.
Total traded volume stood at 34,395 lots of 25 tonnes each, just slightly below the average of 35,000 lots.
Technicals showed that palm oil, after opening with a big gap on Monday, may hover above 2,407 ringgit for a while or pull back to this level before heading towards 2,491 ringgit, said Reuters market analyst Wang Tao.
Prices were also supported by stronger demand from Europe, India and China. Exports over Aug. 1-25 rose 7.1 percent to 1,162,884 tonnes, cargo surveyor Intertek Testing Services said on Monday.
Another cargo surveyor, Societe Generale de Surveillance, will release export data for the same period later in the day.
Investors expect Chinese demand to pick up in the coming weeks as the world's second-largest palm oil buyer stocks up on the edible oil ahead of its mid-autumn festival in September.
In other markets, Brent crude extended gains above $111 a barrel on Monday to a near five-month high as rising tension over a suspected chemical weapons attack in Syria added to concerns that increased unrest in the Middle East could disrupt supply.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2485 +66.00 2470 2500 503
MY PALM OIL OCT3 2446 +61.00 2437 2468 4053
MY PALM OIL NOV3 2433 +66.00 2420 2451 17970
CHINA PALM OLEIN JAN4 5754 +220.00 5650 5754 221738
CHINA SOYOIL JAN4 7362 +282.00 7208 7362 720644
CBOT SOY OIL DEC3 44.31 +1.31 43.05 44.73 23199
NYMEX CRUDE OCT3 106.40 -0.02 106.34 107.37 15441
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=3.3 Malaysian ringgit)
Chicago soybeans climbed to an 11-month high as hot and dry weather in the U.S. grain belt prompted a farm advisory to trim its soy harvest outlook, lending strength to palm oil which is a close substitute of soybean oil.
The U.S. soyoil contract for December rose 3.1 percent in late Asian trade while the most-active January soybean oil contract on the Dalian Commodities Exchange climbed 4.0 percent.
A smaller amount of soybeans for crushing could shift demand to rival palm oil, which is commonly used in products ranging from chocolate to shower creams.
"It's purely a 'weather-market' now in the United States and palm oil is getting a free ride from this factor," said a trader with a foreign commodities brokerage in Malaysia.
"Palm today is very strong on the back of the U.S. weather and the fear of the heat wave," the trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange rose 3.5 percent to 2,451 ringgit ($740) per tonne in early trade, the highest since June 20.
Prices eased slightly to close at 2,433 ringgit.
Total traded volume stood at 34,395 lots of 25 tonnes each, just slightly below the average of 35,000 lots.
Technicals showed that palm oil, after opening with a big gap on Monday, may hover above 2,407 ringgit for a while or pull back to this level before heading towards 2,491 ringgit, said Reuters market analyst Wang Tao.
Prices were also supported by stronger demand from Europe, India and China. Exports over Aug. 1-25 rose 7.1 percent to 1,162,884 tonnes, cargo surveyor Intertek Testing Services said on Monday.
Another cargo surveyor, Societe Generale de Surveillance, will release export data for the same period later in the day.
Investors expect Chinese demand to pick up in the coming weeks as the world's second-largest palm oil buyer stocks up on the edible oil ahead of its mid-autumn festival in September.
In other markets, Brent crude extended gains above $111 a barrel on Monday to a near five-month high as rising tension over a suspected chemical weapons attack in Syria added to concerns that increased unrest in the Middle East could disrupt supply.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2485 +66.00 2470 2500 503
MY PALM OIL OCT3 2446 +61.00 2437 2468 4053
MY PALM OIL NOV3 2433 +66.00 2420 2451 17970
CHINA PALM OLEIN JAN4 5754 +220.00 5650 5754 221738
CHINA SOYOIL JAN4 7362 +282.00 7208 7362 720644
CBOT SOY OIL DEC3 44.31 +1.31 43.05 44.73 23199
NYMEX CRUDE OCT3 106.40 -0.02 106.34 107.37 15441
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=3.3 Malaysian ringgit)