MARKET DEVELOPMENT
VEGOILS-Palm Ends Lower, High US Soybean Supply Drags
VEGOILS-Palm Ends Lower, High US Soybean Supply Drags
03/10/2013 (Reuters) - Malaysian palm oil futures ended lower on Wednesday, tracking weak soy markets, as investors fretted about surging global supply of the competing oilseed that could snatch demand away from the tropical palm.
U.S. soybeans traded near a 19-month low in the wake of a government agricultural report that showed larger-than-expected existing supplies as well as improving weather conditions for new crops.
Larger supplies of soybeans for crushing into soyoil could channel food and fuel demand away from palm oil. The drop in soy oil prices have also narrowed palm oil's discount to the rival vegetable oil, traders said.
"Soybean and soybean oil prices have touched new lows and dragged our market down," said a trader with a foreign commodities brokerage in Malaysia.
"For the past week the spread between crude palm oil and soy has narrowed to $175 per tonne. All the while it has been above $200," the trader added.
By Wednesday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.7 percent to 2,312 ringgit ($710) per tonne. Prices traded in a range of 2,303-2,334 ringgit.
Total traded volumes stood at 35,439 lots of 25 tonnes each, right at the average 35,000 lots.
Technicals showed that signals remain neutral for Malaysian palm oil and will become clearer when the contract gets out of a range of 2,265-2,332 ringgit per tonne, Reuters market analyst Wang Tao said.
The shutdown of the U.S government, which includes the U.S.Department of Agriculture, due to a budget impasse also weighed on agricultural markets as many traders rely on USDA reports for key information on crop conditions and export sales.
In other markets, Brent crude oil extended losses below $108 a barrel on signs of improving global supply and expectations that U.S. oil stockpiles are beginning to build.
In competing vegetable oil markets, the U.S. soyoil contract for December edged down 1.02 percent in late Asian trade.
The Dalian Commodities Exchange is closed for a holiday and will reopen on Oct. 8.
Palm, soy and crude oil prices at 1026 GMT
U.S. soybeans traded near a 19-month low in the wake of a government agricultural report that showed larger-than-expected existing supplies as well as improving weather conditions for new crops.
Larger supplies of soybeans for crushing into soyoil could channel food and fuel demand away from palm oil. The drop in soy oil prices have also narrowed palm oil's discount to the rival vegetable oil, traders said.
"Soybean and soybean oil prices have touched new lows and dragged our market down," said a trader with a foreign commodities brokerage in Malaysia.
"For the past week the spread between crude palm oil and soy has narrowed to $175 per tonne. All the while it has been above $200," the trader added.
By Wednesday's close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.7 percent to 2,312 ringgit ($710) per tonne. Prices traded in a range of 2,303-2,334 ringgit.
Total traded volumes stood at 35,439 lots of 25 tonnes each, right at the average 35,000 lots.
Technicals showed that signals remain neutral for Malaysian palm oil and will become clearer when the contract gets out of a range of 2,265-2,332 ringgit per tonne, Reuters market analyst Wang Tao said.
The shutdown of the U.S government, which includes the U.S.Department of Agriculture, due to a budget impasse also weighed on agricultural markets as many traders rely on USDA reports for key information on crop conditions and export sales.
In other markets, Brent crude oil extended losses below $108 a barrel on signs of improving global supply and expectations that U.S. oil stockpiles are beginning to build.
In competing vegetable oil markets, the U.S. soyoil contract for December edged down 1.02 percent in late Asian trade.
The Dalian Commodities Exchange is closed for a holiday and will reopen on Oct. 8.
Palm, soy and crude oil prices at 1026 GMT
Contract Month Last Change Low High Volume MY PALM OIL OCT3 2356 -12.00 2350 2367 492 MY PALM OIL NOV3 2316 -14.00 2308 2338 2959 MY PALM OIL DEC3 2312 -17.00 2303 2334 21720 CHINA PALM OLEIN JAN4 5384 -2.00 5370 5418 230740 CHINA SOYOIL JAN4 6960 -52.00 6934 7008 359152 CBOT SOY OIL DEC3 39.87 -0.40 39.82 40.33 9351 NYMEX CRUDE NOV3 101.75 -0.29 101.43 101.82 10965 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 = 3.2345 Malaysian ringgit)