MARKET DEVELOPMENT
VEGOILS-Palm Edges up From 3-Week Low, USDA Data Eyed
VEGOILS-Palm Edges up From 3-Week Low, USDA Data Eyed
13/09/2013 (Reuters) - Malaysian palm oil futures ended higher on Thursday, snapping three straight sessions of losses after an early three-week low lured bargain hunters into the market.
But gains were capped by caution ahead of the release of soy crop data from the U.S. Department of Agriculture (USDA), due at 1600 GMT, which is expected to forecast lower production after hot dry weather across the country's crop belt.
Palm oil tracks soy closely as the tropical oil is used as a substitute for soybean oil.
"We should see some range trading today ahead of the USDA report ... there's some reversal after three days of losses, with immediate support at 2,320 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange had edged up 0.5 percent to 2,344 ringgit ($715) per tonne by Thursday's close. The contract had earlier dipped to 2,322 ringgit, a level not seen since Aug. 22.
Total traded volumes stood at 21,920 lots of 25 tonnes each, lower than the average 35,000 lots.
Technicals showed palm oil is expected to drop to a support at 2,311 ringgit per tonne, a break below which will lead to a further loss to 2,270 ringgit, says Reuters market analyst Wang Tao.
Malaysia's palm oil end-stocks in August inched up 0.1 percent from a month ago to 1.67 million tonnes, below expectations of a 4 percent increase as resilient exports helped offset an increase in production.
But traders and analysts said inventory levels may climb higher this month, as output is expected to outgrow exports.
Leading industry analyst Dorab Mistry said palm oil prices are likely to drop sharply in the coming months as seasonally higher output from Southeast Asia and larger supplies of competing oilseeds flood the market.
Oil palm trees in Indonesia and Malaysia could produce more fruit until at least April 2014, Mistry said on Thursday, and drag prices to fresh lows in early January.
In other markets, global oil prices rose above $112 a barrel on Thursday as investors waited to see if diplomatic efforts to eliminate Syria's chemical weapons would avert a U.S. strike that could further disrupt Middle East supplies.
In vegetable oil markets, the U.S. soyoil contract for December gained 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange eased 0.1 percent.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 0 +0.00 0 0 0
MY PALM OIL OCT3 2351 +10.00 2333 2365 1068
MY PALM OIL NOV3 2344 +11.00 2322 2355 12037
CHINA PALM OLEIN JAN4 5498 -8.00 5474 5540 417396
CHINA SOYOIL JAN4 7200 -8.00 7200 7254 677144
CBOT SOY OIL DEC3 43.07 +0.11 42.98 43.22 3499
NYMEX CRUDE OCT3 107.95 +0.39 107.30 108.02 19565
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=3.273 Malaysian ringgit)
But gains were capped by caution ahead of the release of soy crop data from the U.S. Department of Agriculture (USDA), due at 1600 GMT, which is expected to forecast lower production after hot dry weather across the country's crop belt.
Palm oil tracks soy closely as the tropical oil is used as a substitute for soybean oil.
"We should see some range trading today ahead of the USDA report ... there's some reversal after three days of losses, with immediate support at 2,320 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange had edged up 0.5 percent to 2,344 ringgit ($715) per tonne by Thursday's close. The contract had earlier dipped to 2,322 ringgit, a level not seen since Aug. 22.
Total traded volumes stood at 21,920 lots of 25 tonnes each, lower than the average 35,000 lots.
Technicals showed palm oil is expected to drop to a support at 2,311 ringgit per tonne, a break below which will lead to a further loss to 2,270 ringgit, says Reuters market analyst Wang Tao.
Malaysia's palm oil end-stocks in August inched up 0.1 percent from a month ago to 1.67 million tonnes, below expectations of a 4 percent increase as resilient exports helped offset an increase in production.
But traders and analysts said inventory levels may climb higher this month, as output is expected to outgrow exports.
Leading industry analyst Dorab Mistry said palm oil prices are likely to drop sharply in the coming months as seasonally higher output from Southeast Asia and larger supplies of competing oilseeds flood the market.
Oil palm trees in Indonesia and Malaysia could produce more fruit until at least April 2014, Mistry said on Thursday, and drag prices to fresh lows in early January.
In other markets, global oil prices rose above $112 a barrel on Thursday as investors waited to see if diplomatic efforts to eliminate Syria's chemical weapons would avert a U.S. strike that could further disrupt Middle East supplies.
In vegetable oil markets, the U.S. soyoil contract for December gained 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange eased 0.1 percent.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP3 0 +0.00 0 0 0
MY PALM OIL OCT3 2351 +10.00 2333 2365 1068
MY PALM OIL NOV3 2344 +11.00 2322 2355 12037
CHINA PALM OLEIN JAN4 5498 -8.00 5474 5540 417396
CHINA SOYOIL JAN4 7200 -8.00 7200 7254 677144
CBOT SOY OIL DEC3 43.07 +0.11 42.98 43.22 3499
NYMEX CRUDE OCT3 107.95 +0.39 107.30 108.02 19565
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=3.273 Malaysian ringgit)