MARKET DEVELOPMENT
VEGOILS-Palm Snaps Six Sessions of Gains, But Demand Seen Steady
VEGOILS-Palm Snaps Six Sessions of Gains, But Demand Seen Steady
30/08/2013 (Reuters) - Malaysian palm oil futures slipped on Thursday as investors took profits from six straight sessions of gains that were driven by expectations that hot U.S. weather would curb the availability of competing soybean oil.
Dry weather and insufficient rains in the U.S. Midwest fanned concerns of tighter global oilseed supplies and have driven palm oil prices up almost 3 percent so far this week. Prices have also been supported by a weak ringgit currency, which helps improve margins for overseas buyers.
Less soybeans for crushing into soyoil will benefit palm markets as it could shift demand to the cheaper tropical oil.
"The market had rallied more than a hundred ringgit on the back of the U.S. weather, weakness in the ringgit and the strength of crude oil prices," said a trader with a foreign commodities brokerage. The price of crude oil impacts demand for palm oil which is used as feedstock for biodiesel.
"But now the palm market is at an overbought situation so there should be a correction and profit-taking after the windfall that drove prices up," the trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange lost 1.8 percent to close at 2,437 ringgit ($736) per tonne. Prices traded in a 2,406-2,470 ringgit range.
Total traded volume stood at 45,260 lots of 25 tonnes each, well above the average 35,000 lots.
Technicals showed palm oil is expected to drop to 2,407 ringgit per tonne, as it could have completed a rebound from 2,137 ringgit, Reuters market analyst Wang Tao said.
But healthy exports this month point to steady demand for Malaysian palm oil. Shipments in the Aug. 1-25 period rose 7-8 percent compared to a month ago, "Exports at the end of the month could be marginally higher by 2-4 percent compared to July," the trader added.
In other markets, Brent crude dropped to $115 a barrel as the possibility of a delay in a U.S.-led military strike on Syria helped calm concerns over Middle East oil supplies.
In vegetable oil markets, the U.S. soyoil contract for December eased 0.6 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 2.2 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2444 -45.00 2420 2463 139
MY PALM OIL OCT3 2444 -46.00 2416 2475 4286
MY PALM OIL NOV3 2437 -44.00 2406 2470 22917
CHINA PALM OLEIN JAN4 5594 -200.00 5564 5764 766712
CHINA SOYOIL JAN4 7224 -164.00 7094 7366 1154718
CBOT SOY OIL DEC3 44.53 -0.25 44.03 44.90 11960
NYMEX CRUDE OCT3 109.11 -0.99 108.60 109.74 23338
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=3.31 Malaysian ringgit)
Dry weather and insufficient rains in the U.S. Midwest fanned concerns of tighter global oilseed supplies and have driven palm oil prices up almost 3 percent so far this week. Prices have also been supported by a weak ringgit currency, which helps improve margins for overseas buyers.
Less soybeans for crushing into soyoil will benefit palm markets as it could shift demand to the cheaper tropical oil.
"The market had rallied more than a hundred ringgit on the back of the U.S. weather, weakness in the ringgit and the strength of crude oil prices," said a trader with a foreign commodities brokerage. The price of crude oil impacts demand for palm oil which is used as feedstock for biodiesel.
"But now the palm market is at an overbought situation so there should be a correction and profit-taking after the windfall that drove prices up," the trader added.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange lost 1.8 percent to close at 2,437 ringgit ($736) per tonne. Prices traded in a 2,406-2,470 ringgit range.
Total traded volume stood at 45,260 lots of 25 tonnes each, well above the average 35,000 lots.
Technicals showed palm oil is expected to drop to 2,407 ringgit per tonne, as it could have completed a rebound from 2,137 ringgit, Reuters market analyst Wang Tao said.
But healthy exports this month point to steady demand for Malaysian palm oil. Shipments in the Aug. 1-25 period rose 7-8 percent compared to a month ago, "Exports at the end of the month could be marginally higher by 2-4 percent compared to July," the trader added.
In other markets, Brent crude dropped to $115 a barrel as the possibility of a delay in a U.S.-led military strike on Syria helped calm concerns over Middle East oil supplies.
In vegetable oil markets, the U.S. soyoil contract for December eased 0.6 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 2.2 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 2444 -45.00 2420 2463 139
MY PALM OIL OCT3 2444 -46.00 2416 2475 4286
MY PALM OIL NOV3 2437 -44.00 2406 2470 22917
CHINA PALM OLEIN JAN4 5594 -200.00 5564 5764 766712
CHINA SOYOIL JAN4 7224 -164.00 7094 7366 1154718
CBOT SOY OIL DEC3 44.53 -0.25 44.03 44.90 11960
NYMEX CRUDE OCT3 109.11 -0.99 108.60 109.74 23338
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=3.31 Malaysian ringgit)