MARKET DEVELOPMENT
VEGOILS-Palm Dips to One-week Low; Likely Drop in Output Lends Support
VEGOILS-Palm Dips to One-week Low; Likely Drop in Output Lends Support
07/11/2013 (Reuters) - Malaysian palm oil futures fell to a one-week low on Wednesday as investors continued to take profits after prices surged to one-year highs last week, but the prospect of a drop in production capped losses.
Benchmark prices had their biggest weekly gain in more than four years last week, lifted by strong Asian demand and expectations that Southeast Asian palm oil output has begun to taper off.
Malaysia and Indonesia, which account for about 90 percent of the world's palm oil supply, should start to see smaller yields of the tropical oil as seasonal monsoon rains roll in.
"There's some mild profit-taking at this level since margins are lower, but the downside could be limited because a lot of investors are expecting bullish to neutral MPOB numbers," said a trader with a local commodities brokerage, referring to the Malaysian Palm Oil Board, the industry regulator.
"November's production could even be lower by 5-8 percent," the trader added. A drop in output would eat into stocks, which stood at 1.78 million tonnes at the end of September.
The MPOB will release data on Malaysia's end-October palm oil stocks, exports and output on Nov. 11.
At Wednesday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had dropped 1.3 percent to 2,547 ringgit ($801) per tonne. Earlier it hit 2,545 ringgit, the lowest since Oct. 30.
Total traded volume stood at 36,225 lots of 25 tonnes each, slightly higher than the average 35,000 lots.
Technicals showed Malaysian palm oil was expected to test support at 2,544 ringgit per tonne and a break below that would lead to a further loss to 2,491 ringgit, said Reuters market analyst Wang Tao.
The weaker Malaysian ringgit also provided some support on Wednesday as it stokes buying interest from overseas buyers. The currency had fallen 0.19 percent to 3.1800 against the U.S. dollar by late trade.
In other markets, Brent oil rose to $106 a barrel, supported by a fall in U.S. oil product inventories and worries about prolonged disruption to supply from Libya as the peak winter heating season looms.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.7 percent.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL NOV3 2566 -34.00 2560 2588 159
MY PALM OIL DEC3 2550 -37.00 2550 2582 1076
MY PALM OIL JAN4 2547 -33.00 2545 2585 18847
CHINA PALM OLEIN MAY4 6270 -8.00 6252 6300 566750
CHINA SOYOIL MAY4 7206 -52.00 7202 7252 673480
CBOT SOY OIL DEC3 41.18 +0.03 41.08 41.35 4162
NYMEX CRUDE DEC3 94.10 +0.73 93.65 94.25 14999
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 = 3.18 Malaysian ringgit)
Benchmark prices had their biggest weekly gain in more than four years last week, lifted by strong Asian demand and expectations that Southeast Asian palm oil output has begun to taper off.
Malaysia and Indonesia, which account for about 90 percent of the world's palm oil supply, should start to see smaller yields of the tropical oil as seasonal monsoon rains roll in.
"There's some mild profit-taking at this level since margins are lower, but the downside could be limited because a lot of investors are expecting bullish to neutral MPOB numbers," said a trader with a local commodities brokerage, referring to the Malaysian Palm Oil Board, the industry regulator.
"November's production could even be lower by 5-8 percent," the trader added. A drop in output would eat into stocks, which stood at 1.78 million tonnes at the end of September.
The MPOB will release data on Malaysia's end-October palm oil stocks, exports and output on Nov. 11.
At Wednesday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had dropped 1.3 percent to 2,547 ringgit ($801) per tonne. Earlier it hit 2,545 ringgit, the lowest since Oct. 30.
Total traded volume stood at 36,225 lots of 25 tonnes each, slightly higher than the average 35,000 lots.
Technicals showed Malaysian palm oil was expected to test support at 2,544 ringgit per tonne and a break below that would lead to a further loss to 2,491 ringgit, said Reuters market analyst Wang Tao.
The weaker Malaysian ringgit also provided some support on Wednesday as it stokes buying interest from overseas buyers. The currency had fallen 0.19 percent to 3.1800 against the U.S. dollar by late trade.
In other markets, Brent oil rose to $106 a barrel, supported by a fall in U.S. oil product inventories and worries about prolonged disruption to supply from Libya as the peak winter heating season looms.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.1 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.7 percent.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL NOV3 2566 -34.00 2560 2588 159
MY PALM OIL DEC3 2550 -37.00 2550 2582 1076
MY PALM OIL JAN4 2547 -33.00 2545 2585 18847
CHINA PALM OLEIN MAY4 6270 -8.00 6252 6300 566750
CHINA SOYOIL MAY4 7206 -52.00 7202 7252 673480
CBOT SOY OIL DEC3 41.18 +0.03 41.08 41.35 4162
NYMEX CRUDE DEC3 94.10 +0.73 93.65 94.25 14999
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 = 3.18 Malaysian ringgit)