MARKET DEVELOPMENT
VEGOILS-Palm Down For Second Day on Ringgit Strength
VEGOILS-Palm Down For Second Day on Ringgit Strength
04/10/2013 (Reuters) - Malaysian palm oil futures ended lower for a second session on Thursday as the U.S.government shutdown buoyed the ringgit currency, curbing demand from overseas buyers.
Lingering bearish sentiment on competing soybeans also weighed on palm prices.
The U.S. dollar sagged to eight-month lows on Thursday as the government shutdown dragged on with no end in sight, triggering a rally in emerging Asian currencies which climbed versus the greenback.
The Malaysian ringgit was up 1.1 percent at 3.1935 against the dollar late on Thursday, adding pressure on palm prices as it made the ringgit-priced feedstock more expensive for overseas buyers and refiners.
U.S. soybeans had plunged to a 19-month low on Tuesday after a government report showed supplies were actually much larger than expected. Prices on Thursday rose on bargain-hunting, but ideal weather in the U.S. grain belt could speed up harvests of bumper crops.
Bigger supplies of soybeans for crushing into soyoil could snatch demand away from palm oil, the world's most traded vegetable oil. Traders say the drop in soyoil prices have already narrowed palm oil's discount to its competitors.
"The market came down today because of weak soy markets. Another contributing factor is the strength of the ringgit," said a trader with a local commodities brokerage in Kuala Lumpur.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange had shed 0.4 percent to 2,302 ringgit ($720) per tonne by Thursday's close. Prices traded in a
tight range of 2,285-2,310 ringgit.
Total traded volumes stood at 21,326 lots of 25 tonnes each, much lower than the average 35,000 lots.
"I think prices will be rangebound until the Malaysian Palm Oil Board (MPOB) report," the trader added.
Industry regulator MPOB will release official data on September's stocks, exports, and output in the world's No.2 producer on Oct. 10. Malaysian palm oil stocks at end-August stood at 1.67 million tonnes.
Technicals showed that signals continue to be neutral for Malaysian palm oil as it remains in a range of 2,265-2,332 ringgit per tonne, Reuters market analyst Wang Tao said.
In other markets, crude oil slipped to around $109 a barrel on Thursday on worries that a prolonged U.S. government shutdown would hurt demand in the world's biggest oil consumer.
Weaker crude oil prices could also channel some demand away from palm oil, which is often used as a substitute to produce biofuels.
In competing vegetable oil markets, the U.S. soyoil contract for December gained 0.9 percent in late Asian trade. The Dalian Commodities Exchange is closed for a holiday and will reopen on Oct. 8.
Lingering bearish sentiment on competing soybeans also weighed on palm prices.
The U.S. dollar sagged to eight-month lows on Thursday as the government shutdown dragged on with no end in sight, triggering a rally in emerging Asian currencies which climbed versus the greenback.
The Malaysian ringgit was up 1.1 percent at 3.1935 against the dollar late on Thursday, adding pressure on palm prices as it made the ringgit-priced feedstock more expensive for overseas buyers and refiners.
U.S. soybeans had plunged to a 19-month low on Tuesday after a government report showed supplies were actually much larger than expected. Prices on Thursday rose on bargain-hunting, but ideal weather in the U.S. grain belt could speed up harvests of bumper crops.
Bigger supplies of soybeans for crushing into soyoil could snatch demand away from palm oil, the world's most traded vegetable oil. Traders say the drop in soyoil prices have already narrowed palm oil's discount to its competitors.
"The market came down today because of weak soy markets. Another contributing factor is the strength of the ringgit," said a trader with a local commodities brokerage in Kuala Lumpur.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange had shed 0.4 percent to 2,302 ringgit ($720) per tonne by Thursday's close. Prices traded in a
tight range of 2,285-2,310 ringgit.
Total traded volumes stood at 21,326 lots of 25 tonnes each, much lower than the average 35,000 lots.
"I think prices will be rangebound until the Malaysian Palm Oil Board (MPOB) report," the trader added.
Industry regulator MPOB will release official data on September's stocks, exports, and output in the world's No.2 producer on Oct. 10. Malaysian palm oil stocks at end-August stood at 1.67 million tonnes.
Technicals showed that signals continue to be neutral for Malaysian palm oil as it remains in a range of 2,265-2,332 ringgit per tonne, Reuters market analyst Wang Tao said.
In other markets, crude oil slipped to around $109 a barrel on Thursday on worries that a prolonged U.S. government shutdown would hurt demand in the world's biggest oil consumer.
Weaker crude oil prices could also channel some demand away from palm oil, which is often used as a substitute to produce biofuels.
In competing vegetable oil markets, the U.S. soyoil contract for December gained 0.9 percent in late Asian trade. The Dalian Commodities Exchange is closed for a holiday and will reopen on Oct. 8.