MARKET DEVELOPMENT
VEGOILS-Palm Ends At 2-week High on Short-Covering Bounce
VEGOILS-Palm Ends At 2-week High on Short-Covering Bounce
02/10/2013 (Reuters) - Malaysian palm oil futures ended higher on Tuesday, posting their third straight session of gains and reversing morning losses as technical buying supported prices, although bearish investor sentiment capped gains.
By Tuesday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged up 0.4 percent to 2,330 ringgit ($720) per tonne. Prices reached as high as 2,332 ringgit, the highest since Sept. 18.
"It's because of technical short-covering," said a trader with a foreign commodities brokerage. "The palm market was bearish in the morning because of the big drop in soyoil and soybean markets. But towards the afternoon prices rose and that triggered buy-stop orders," the trader added.
Prices fell 1.5 percent in the early session with other edible oils after a U.S. agricultural report surprised investors with higher-than-expected supplies of competing oilseeds.
U.S. soybean stockpiles were estimated at 141 million bushels, the Agriculture Department said on Monday, far larger than the 124 million expected by analysts and traders. Chicago soybeans slid to a six-week low.
Larger supplies of soybeans for crushing into soyoil could snatch demand away from palm oil, a rival vegetable oil.
Sentiment was also hurt by forecasts of a seasonal rise in palm oil output as trees produce more fruit, although some traders said stockpiles could stay below the two million tonne level for now.
Stocks at end-August stood at 1.67 million tonnes, having fallen nearly 40 percent from record highs in December.
A trader with a local commodities brokerage told Reuters that market players believed "prices won't fall to 2,200 ringgit, because despite the pickup in production, end-stocks don't show signs of going above 2 million metric tonnes."
The Malaysian ringgit strengthened further late on Tuesday, rising 0.88 percent to 3.2310, as the U.S. government began a partial shutdown that weighed on the dollar. The stronger local currency capped prices and made the ringgit-priced feedstock more expensive for overseas buyers.
Total traded volumes stood at 23,244 lots of 25 tonnes each, below the average 35,000 lots.
On the technical front, Malaysian palm oil looks neutral in a range of 2,265-2,327 ringgit per tonne and only an escape will point to a direction, said Reuters market analyst Wang Tao.
Amid forecasts of rising Southeast Asian palm oil output, prices may get some respite from the monsoon season that could hit the region in October.
Indonesia, the world's largest producer, said on Monday its production may rise only 5 percent to 26.7 million tonnes this year due to wet weather conditions, below previous estimates of 28 million tonnes.
Wet weather could disturb pollination of fresh fruit bunches, while heavy rain storms could disrupt harvesting and complicate logistics.
In other markets, Brent crude eased to $108 a barrel on Tuesday, near a seven-week low, on worries that a shutdown of the U.S. government will crimp oil demand, while easing tensions in U.S.-Iran nuclear talks boosted prospects for rising supply.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The Dalian Commodities Exchange was closed for a holiday and will reopen on Tuesday Oct. 8.
Palm, soy and crude oil prices at 1039 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2377 +13.00 2338 2377 520
MY PALM OIL NOV3 2331 +13.00 2285 2332 2186
MY PALM OIL DEC3 2330 +9.00 2284 2332 17281
CHINA PALM OLEIN JAN4 5384 -2.00 5370 5418 230740
CHINA SOYOIL JAN4 6960 -52.00 6934 7008 359152
CBOT SOY OIL DEC3 41.13 +0.03 40.98 41.20 5181
NYMEX CRUDE NOV3 102.52 +0.19 101.84 102.58 17165
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=3.233 Malaysian ringgit)
By Tuesday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged up 0.4 percent to 2,330 ringgit ($720) per tonne. Prices reached as high as 2,332 ringgit, the highest since Sept. 18.
"It's because of technical short-covering," said a trader with a foreign commodities brokerage. "The palm market was bearish in the morning because of the big drop in soyoil and soybean markets. But towards the afternoon prices rose and that triggered buy-stop orders," the trader added.
Prices fell 1.5 percent in the early session with other edible oils after a U.S. agricultural report surprised investors with higher-than-expected supplies of competing oilseeds.
U.S. soybean stockpiles were estimated at 141 million bushels, the Agriculture Department said on Monday, far larger than the 124 million expected by analysts and traders. Chicago soybeans slid to a six-week low.
Larger supplies of soybeans for crushing into soyoil could snatch demand away from palm oil, a rival vegetable oil.
Sentiment was also hurt by forecasts of a seasonal rise in palm oil output as trees produce more fruit, although some traders said stockpiles could stay below the two million tonne level for now.
Stocks at end-August stood at 1.67 million tonnes, having fallen nearly 40 percent from record highs in December.
A trader with a local commodities brokerage told Reuters that market players believed "prices won't fall to 2,200 ringgit, because despite the pickup in production, end-stocks don't show signs of going above 2 million metric tonnes."
The Malaysian ringgit strengthened further late on Tuesday, rising 0.88 percent to 3.2310, as the U.S. government began a partial shutdown that weighed on the dollar. The stronger local currency capped prices and made the ringgit-priced feedstock more expensive for overseas buyers.
Total traded volumes stood at 23,244 lots of 25 tonnes each, below the average 35,000 lots.
On the technical front, Malaysian palm oil looks neutral in a range of 2,265-2,327 ringgit per tonne and only an escape will point to a direction, said Reuters market analyst Wang Tao.
Amid forecasts of rising Southeast Asian palm oil output, prices may get some respite from the monsoon season that could hit the region in October.
Indonesia, the world's largest producer, said on Monday its production may rise only 5 percent to 26.7 million tonnes this year due to wet weather conditions, below previous estimates of 28 million tonnes.
Wet weather could disturb pollination of fresh fruit bunches, while heavy rain storms could disrupt harvesting and complicate logistics.
In other markets, Brent crude eased to $108 a barrel on Tuesday, near a seven-week low, on worries that a shutdown of the U.S. government will crimp oil demand, while easing tensions in U.S.-Iran nuclear talks boosted prospects for rising supply.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The Dalian Commodities Exchange was closed for a holiday and will reopen on Tuesday Oct. 8.
Palm, soy and crude oil prices at 1039 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT3 2377 +13.00 2338 2377 520
MY PALM OIL NOV3 2331 +13.00 2285 2332 2186
MY PALM OIL DEC3 2330 +9.00 2284 2332 17281
CHINA PALM OLEIN JAN4 5384 -2.00 5370 5418 230740
CHINA SOYOIL JAN4 6960 -52.00 6934 7008 359152
CBOT SOY OIL DEC3 41.13 +0.03 40.98 41.20 5181
NYMEX CRUDE NOV3 102.52 +0.19 101.84 102.58 17165
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=3.233 Malaysian ringgit)