MARKET DEVELOPMENT
VEGOILS-Palm Oil Falls on Higher Output Concerns, Exports Support
VEGOILS-Palm Oil Falls on Higher Output Concerns, Exports Support
26/11/2013 (Reuters) - Malaysian palm oil futures fell on Monday, reversing morning gains, after growers' estimates sparked concerns that output in the world's No.2 producer may have risen in November and could overwhelm demand.
Traders said figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that Nov. 1-20 palm oil production rose 4.1 percent from October's 1.97 million tonnes, despite expectations that monsoon rains would slow output.
"Higher output may cap gains in the short term, but for the long run, prices will depend on demand," a trader with a local commodities brokerage said.
By Monday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had fallen 0.5 percent to 2,629 ringgit ($822) per tonne, after climbing as high as 2,664 in the morning session.
Traded volume amounted to 32,920 lots of 25 tonnes each, slightly below the daily average of 35,000 lots.
Better-than-expected exports, however, signalled that demand could hold for now, despite concerns that buyers could switch to substitutes in winter.
Palm oil tends to solidify in cold temperature and that usually cuts demand towards the end of the year as buyers in the northern hemisphere turn to other edible oils such as soyoil.
Data from cargo surveyor Intertek Testing Services showed that exports of Malaysian palm oil shipped from Nov. 1-25 stood at 1,229,580 tonnes, 0.1 percent lower than in the same period in October, as higher shipments to Europe and India offset weaker demand from China.
Another cargo surveyor, Societe Generale de Surveillance, showed exports in the same period slipped 2.3 percent to 1,230,878 tonnes.
Palm oil output in Indonesia will grow by up to 6 percent to 28.5 million tonnes next year, Fadhil Hasan, executive director of the Indonesian Palm Oil Association (GAPKI), told Reuters.
Fadhil said global palm oil prices should also rise to an average $850 to $950 a tonne as the world economy recovers and on higher Indonesian demand due to new biodiesel regulations.
The higher biofuel blend imposed by the world's largest palm oil grower could see more of its palm oil snapped up for domestic use, leaving importers to look for cheaper deals in rival Malaysia.
"The biodiesel plan in Indonesia seems to be moving swiftly. If there is less palm oil available for export in Indonesia, the demand will shift to Malaysia," said Kenanga Investment analyst Alan Lim.
In other markets, Brent crude dropped as much as $3 a barrel on Monday as supply fears eased following a breakthrough nuclear deal between world powers and Iran over the weekend.
In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.2 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2620 -20.00 2617 2650 249
MY PALM OIL JAN4 2630 -12.00 2619 2663 5947
MY PALM OIL FEB4 2629 -13.00 2619 2664 17468
CHINA PALM OLEIN MAY4 6450 -2.00 6400 6494 832040
CHINA SOYOIL MAY4 7314 -28.00 7292 7352 788588
CBOT SOY OIL JAN4 41.30 -0.15 41.27 41.58 9137
NYMEX CRUDE JAN4 93.41 -1.43 93.29 94.19 29060
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=3.21 Malaysian ringgit)
Traders said figures from the Malaysian Palm Oil Association (MPOA), a group of planters, showed that Nov. 1-20 palm oil production rose 4.1 percent from October's 1.97 million tonnes, despite expectations that monsoon rains would slow output.
"Higher output may cap gains in the short term, but for the long run, prices will depend on demand," a trader with a local commodities brokerage said.
By Monday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had fallen 0.5 percent to 2,629 ringgit ($822) per tonne, after climbing as high as 2,664 in the morning session.
Traded volume amounted to 32,920 lots of 25 tonnes each, slightly below the daily average of 35,000 lots.
Better-than-expected exports, however, signalled that demand could hold for now, despite concerns that buyers could switch to substitutes in winter.
Palm oil tends to solidify in cold temperature and that usually cuts demand towards the end of the year as buyers in the northern hemisphere turn to other edible oils such as soyoil.
Data from cargo surveyor Intertek Testing Services showed that exports of Malaysian palm oil shipped from Nov. 1-25 stood at 1,229,580 tonnes, 0.1 percent lower than in the same period in October, as higher shipments to Europe and India offset weaker demand from China.
Another cargo surveyor, Societe Generale de Surveillance, showed exports in the same period slipped 2.3 percent to 1,230,878 tonnes.
Palm oil output in Indonesia will grow by up to 6 percent to 28.5 million tonnes next year, Fadhil Hasan, executive director of the Indonesian Palm Oil Association (GAPKI), told Reuters.
Fadhil said global palm oil prices should also rise to an average $850 to $950 a tonne as the world economy recovers and on higher Indonesian demand due to new biodiesel regulations.
The higher biofuel blend imposed by the world's largest palm oil grower could see more of its palm oil snapped up for domestic use, leaving importers to look for cheaper deals in rival Malaysia.
"The biodiesel plan in Indonesia seems to be moving swiftly. If there is less palm oil available for export in Indonesia, the demand will shift to Malaysia," said Kenanga Investment analyst Alan Lim.
In other markets, Brent crude dropped as much as $3 a barrel on Monday as supply fears eased following a breakthrough nuclear deal between world powers and Iran over the weekend.
In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.2 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
Palm, soy and crude oil prices at 1025 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2620 -20.00 2617 2650 249
MY PALM OIL JAN4 2630 -12.00 2619 2663 5947
MY PALM OIL FEB4 2629 -13.00 2619 2664 17468
CHINA PALM OLEIN MAY4 6450 -2.00 6400 6494 832040
CHINA SOYOIL MAY4 7314 -28.00 7292 7352 788588
CBOT SOY OIL JAN4 41.30 -0.15 41.27 41.58 9137
NYMEX CRUDE JAN4 93.41 -1.43 93.29 94.19 29060
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=3.21 Malaysian ringgit)