MARKET DEVELOPMENT
VEGOILS-Palm Ends Higher, Weekly Prices Rise for First Time in 3 Wks
VEGOILS-Palm Ends Higher, Weekly Prices Rise for First Time in 3 Wks
28/09/2013 (Reuters) - Malaysian palm oil futures ended higher on Friday, snapping three straight sessions of losses and turning around weekly prices to post their first gain in three weeks, although predictions of surging supplies in the coming months kept investors wary.
Prices in early trade had hovered near month-and-a-half lows seen on Thursday as prospects of swelling supply of the tropical oil muted investor interest, but the ringgit's poor performance late Friday helped stoke demand and lift palm prices.
The ringgit eased 0.4 percent on dollar-short covering in thin trading after a report showing U.S. jobless claims fell last week renewed some expectations that the Federal Reserve may scale back its stimulus soon.
A weaker ringgit currency makes the feedstock cheaper for overseas buyers.
Palm oil supply could outstrip demand as top world producers Indonesia and Malaysia head into seasonally higher output cycles, said analysts and traders, further depressing prices which have been on a losing streak since 2011.
"Market players expect production to seasonally pick up towards the beginning of the monsoon season," said a trader with a foreign commodities brokerage.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange rose 2.0 percent to 2,312 ringgit ($716) per tonne by Friday's close. Prices for the week rose 0.5 percent, its first gain in three weeks.
Total traded volumes stood at 35,273 lots of 25 tonnes each, slightly above the average 35,000 lots.
Amid forecasts of surging output, both Indonesian and Malaysian governments have pledged to boost domestic consumption of palm oil for biodiesel to help whittle down stockpiles.
Palm oil feedstock is often used as a green alternative to produce biofuels.
Indonesia's consumption of its palm oil is expected to rise by 5.9 percent to 9 million tonnes in 2014, fuelled by a mandatory policy to raise palm oil's proportion in diesel to 10 percent from 7.5 percent, Indonesian Palm Oil Board Chairman Derom Bangun said.
The second-largest producer, Malaysia, said it was looking to push forward the same policy from its current 5 percent requirement, but has not yet specified details.
In other markets, Brent crude oil dropped below $109 a barrel on Friday, heading for its third straight weekly loss, with diplomatic efforts over Syria and Iran helping ease worries about risks to supply from the Middle East.
In vegetable oil markets, the U.S. soyoil contract for December rose 0.6 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.9 percent.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2350 +40.00 2317 2350 210
MY PALM OIL NOV3 2318 +46.00 2268 2318 5865
MY PALM OIL DEC3 2312 +45.00 2266 2312 18812
CHINA PALM OLEIN JAN4 5378 -16.00 5364 5418 320470
CHINA SOYOIL JAN4 6982 -60.00 6978 7058 513574
CBOT SOY OIL DEC3 42.28 +0.23 41.79 42.34 8303
NYMEX CRUDE NOV3 102.53 -0.50 102.36 102.91 12690
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=3.229 Malaysian ringgit)
Prices in early trade had hovered near month-and-a-half lows seen on Thursday as prospects of swelling supply of the tropical oil muted investor interest, but the ringgit's poor performance late Friday helped stoke demand and lift palm prices.
The ringgit eased 0.4 percent on dollar-short covering in thin trading after a report showing U.S. jobless claims fell last week renewed some expectations that the Federal Reserve may scale back its stimulus soon.
A weaker ringgit currency makes the feedstock cheaper for overseas buyers.
Palm oil supply could outstrip demand as top world producers Indonesia and Malaysia head into seasonally higher output cycles, said analysts and traders, further depressing prices which have been on a losing streak since 2011.
"Market players expect production to seasonally pick up towards the beginning of the monsoon season," said a trader with a foreign commodities brokerage.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange rose 2.0 percent to 2,312 ringgit ($716) per tonne by Friday's close. Prices for the week rose 0.5 percent, its first gain in three weeks.
Total traded volumes stood at 35,273 lots of 25 tonnes each, slightly above the average 35,000 lots.
Amid forecasts of surging output, both Indonesian and Malaysian governments have pledged to boost domestic consumption of palm oil for biodiesel to help whittle down stockpiles.
Palm oil feedstock is often used as a green alternative to produce biofuels.
Indonesia's consumption of its palm oil is expected to rise by 5.9 percent to 9 million tonnes in 2014, fuelled by a mandatory policy to raise palm oil's proportion in diesel to 10 percent from 7.5 percent, Indonesian Palm Oil Board Chairman Derom Bangun said.
The second-largest producer, Malaysia, said it was looking to push forward the same policy from its current 5 percent requirement, but has not yet specified details.
In other markets, Brent crude oil dropped below $109 a barrel on Friday, heading for its third straight weekly loss, with diplomatic efforts over Syria and Iran helping ease worries about risks to supply from the Middle East.
In vegetable oil markets, the U.S. soyoil contract for December rose 0.6 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange fell 0.9 percent.
Palm, soy and crude oil prices at 1015 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2350 +40.00 2317 2350 210
MY PALM OIL NOV3 2318 +46.00 2268 2318 5865
MY PALM OIL DEC3 2312 +45.00 2266 2312 18812
CHINA PALM OLEIN JAN4 5378 -16.00 5364 5418 320470
CHINA SOYOIL JAN4 6982 -60.00 6978 7058 513574
CBOT SOY OIL DEC3 42.28 +0.23 41.79 42.34 8303
NYMEX CRUDE NOV3 102.53 -0.50 102.36 102.91 12690
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=3.229 Malaysian ringgit)