MARKET DEVELOPMENT
VEGOILS-Palm Jumps to Highest in More Than A Year on Stocks Outlook
VEGOILS-Palm Jumps to Highest in More Than A Year on Stocks Outlook
22/11/2013 (Reuters) - Malaysian palm oil futures jumped to their highest in more than a year on Thursday after an industry body estimated that stocks in the world's No.2 producer would fall nearly 30 percent this year from the end of 2012 and decline further in 2014.
A senior official from the industry regulator, the Malaysian Palm Oil Board, said stocks could fall to 1.87 million tonnes by end-2013 and then 1.76 million tonnes by end-2014 as foreign and domestic demand outpaced production.
Stocks at the end of October stood at 1.85 million tonnes.
"Prices jumped more than 3 percent on anticipation that supplies are tightening," said a trader with a local commodities brokerage in Kuala Lumpur.
Market players are also optimistic that demand for the tropical oil will hold steady for now, after cargo surveyor data showed export volume in the second half of November was higher than earlier in the month.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange jumped more than 3 percent at one stage on Thursday to 2,663 ringgit ($832), the highest level since Sept. 25, 2012. The price settled at 2,653 ringgit, 2.83 percent higher than the previous session.
Total traded volume stood at 45,262 lots of 25 tonnes each, much higher than the average 35,000 lots as investors moved to cover short positions.
Technicals had shown that palm oil was expected to retest resistance at 2,630 ringgit per tonne, with a good chance of breaking it and rising towards 2,716 ringgit, said Reuters market analyst Wang Tao.
Possible dry spells next year could crimp Southeast Asian palm oil output and tighten stocks going into 2015, a top industry analyst said on Thursday, as trees in top producer Indonesia react to unusually dry weather in the past.
"Looking ahead to 2014, there will be further echoes from the mid-2012 dry spells and new echoes from mid-2013," James Fry, chairman of commodities consultancy LMC International, said at an industry meeting.
He added that Malaysian palm oil stocks would probably be tight in 2015 due to weaker production and higher biodiesel sales, but pressure from competing oilseeds and softer demand for biofuels from the United States and Europe would limit any rise in prices.
In other markets, Brent oil futures slipped below $108 a barrel as the market waited for further indications on whether a preliminary deal between world powers and Iran over the latter's nuclear programme could be reached this week.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 1.0 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 1.5 percent.
Palm, soy and crude oil prices at 1020 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2653 +71.00 2610 2655 804
MY PALM OIL JAN4 2652 +71.00 2601 2663 7951
MY PALM OIL FEB4 2653 +73.00 2603 2663 22299
CHINA PALM OLEIN MAY4 6370 +146.00 6260 6406 1278012
CHINA SOYOIL MAY4 7272 +110.00 7184 7288 1134932
CBOT SOY OIL DEC3 40.73 +0.41 40.27 40.81 5690
NYMEX CRUDE JAN4 93.78 -0.07 93.47 93.89 8600
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 = 3.20 Malaysian ringgit)
A senior official from the industry regulator, the Malaysian Palm Oil Board, said stocks could fall to 1.87 million tonnes by end-2013 and then 1.76 million tonnes by end-2014 as foreign and domestic demand outpaced production.
Stocks at the end of October stood at 1.85 million tonnes.
"Prices jumped more than 3 percent on anticipation that supplies are tightening," said a trader with a local commodities brokerage in Kuala Lumpur.
Market players are also optimistic that demand for the tropical oil will hold steady for now, after cargo surveyor data showed export volume in the second half of November was higher than earlier in the month.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange jumped more than 3 percent at one stage on Thursday to 2,663 ringgit ($832), the highest level since Sept. 25, 2012. The price settled at 2,653 ringgit, 2.83 percent higher than the previous session.
Total traded volume stood at 45,262 lots of 25 tonnes each, much higher than the average 35,000 lots as investors moved to cover short positions.
Technicals had shown that palm oil was expected to retest resistance at 2,630 ringgit per tonne, with a good chance of breaking it and rising towards 2,716 ringgit, said Reuters market analyst Wang Tao.
Possible dry spells next year could crimp Southeast Asian palm oil output and tighten stocks going into 2015, a top industry analyst said on Thursday, as trees in top producer Indonesia react to unusually dry weather in the past.
"Looking ahead to 2014, there will be further echoes from the mid-2012 dry spells and new echoes from mid-2013," James Fry, chairman of commodities consultancy LMC International, said at an industry meeting.
He added that Malaysian palm oil stocks would probably be tight in 2015 due to weaker production and higher biodiesel sales, but pressure from competing oilseeds and softer demand for biofuels from the United States and Europe would limit any rise in prices.
In other markets, Brent oil futures slipped below $108 a barrel as the market waited for further indications on whether a preliminary deal between world powers and Iran over the latter's nuclear programme could be reached this week.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 1.0 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 1.5 percent.
Palm, soy and crude oil prices at 1020 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2653 +71.00 2610 2655 804
MY PALM OIL JAN4 2652 +71.00 2601 2663 7951
MY PALM OIL FEB4 2653 +73.00 2603 2663 22299
CHINA PALM OLEIN MAY4 6370 +146.00 6260 6406 1278012
CHINA SOYOIL MAY4 7272 +110.00 7184 7288 1134932
CBOT SOY OIL DEC3 40.73 +0.41 40.27 40.81 5690
NYMEX CRUDE JAN4 93.78 -0.07 93.47 93.89 8600
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 = 3.20 Malaysian ringgit)