MARKET DEVELOPMENT
VEGOILS-Palm Oil Ends Lower on Profit Taking After Industry Gathering
VEGOILS-Palm Oil Ends Lower on Profit Taking After Industry Gathering
30/11/2013 (Reuters) - Malaysian palm oil futures ended lower on Friday as investors booked profits from gains made earlier in the week, but prices were supported by optimism that higher biofuel mandates will stoke edible oil demand and prop up the tropical oil.
Market players had expected industry officials and leading vegetable oil analysts to deliver a bullish palm oil outlook at an industry meeting in Indonesia, and participated in a bout of position squaring on Thursday, although overall trade volumes were low throughout the week.
"There were a lot of speculative buyers. Those who bought on rumours are now selling and taking profits. They knew these guys were going to be bullish," said a trader with a local commodities brokerage.
By Friday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged down 0.1 percent to 2,653 ringgit ($824) per tonne. However, gains throughout the week lifted prices to post a weekly rise of 0.4 percent, its third straight weekly gain.
Total traded volume stood at 32,703 lots of 25 tonnes, a little lower compared to the usual 35,000 lots as traders rushed to take profits.
Palm oil could benefit from biodiesel policies in top producers Indonesia and Malaysia as more of the tropical oil is snapped up to produce the "greener" fuel. Biodiesel mandates in soy producing Brazil and Argentina would harden rival soyoil prices tracked by palm oil.
Global biofuel demand is expected to increase by at least 2.5 million tonnes next year, leading analyst Dorab Mistry said at the Indonesia Palm Oil Conference and Price Outlook, and could lift palm oil prices to 3,000 ringgit per tonne by March 2014.
"The demand for biodiesel has increased and the timely implementation of higher biodiesel mandates in Malaysia and Indonesia may provide a boost to the palm oil sector," said the world's largest oil palm planter by landbank, Sime Darby Bhd , in a results statement on Friday.
But traders say the palm market needs more than biodiesel demand for prices to rally as bigger supplies of the tropical oil drag.
"According to the latest estimates, Malaysia could produce about 4-4.5 percent more than 2012. That's why each time the market tries to rally, it cannot reach 2,700 ringgit. Every attempt ends up with profit-taking," the Malaysia-based trader added.
The No.2 producer churned out 18.79 million tonnes of palm oil in 2012, and is expected to see about 19.4 million tonnes in 2013 and 19.5 million tonnes in 2014 as replanting schemes take root, according to industry regulator the Malaysian Palm Oil Board.
Technicals showed a bullish target at 2,692 ringgit per tonne for Malaysian palm oil, as a correction from a Nov. 22 high has been completed, Reuters market analyst Wang Tao said.
In other markets, Brent crude firmed slightly on Friday and was set to post the biggest monthly gain since August as prolonged unrest in Libya kept supply disruptions in focus.
In competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodities Exchange rose 1 percent in late Asian trade. The U.S. soyoil market was closed for the Thanksgiving holiday.
Palm, soy and crude oil prices at 1037 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2615 -5.00 2610 2620 228
MY PALM OIL JAN4 2649 -6.00 2641 2674 2523
MY PALM OIL FEB4 2653 -3.00 2644 2678 16242
CHINA PALM OLEIN MAY4 6366 +40.00 6312 6370 756338
CHINA SOYOIL MAY4 7330 +74.00 7256 7334 835558
CBOT SOY OIL JAN4 40.35 +0.00 0.00 0.00 0
NYMEX CRUDE JAN4 92.61 +0.31 92.06 92.64 22771
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=3.22 Malaysian ringgit)
Market players had expected industry officials and leading vegetable oil analysts to deliver a bullish palm oil outlook at an industry meeting in Indonesia, and participated in a bout of position squaring on Thursday, although overall trade volumes were low throughout the week.
"There were a lot of speculative buyers. Those who bought on rumours are now selling and taking profits. They knew these guys were going to be bullish," said a trader with a local commodities brokerage.
By Friday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged down 0.1 percent to 2,653 ringgit ($824) per tonne. However, gains throughout the week lifted prices to post a weekly rise of 0.4 percent, its third straight weekly gain.
Total traded volume stood at 32,703 lots of 25 tonnes, a little lower compared to the usual 35,000 lots as traders rushed to take profits.
Palm oil could benefit from biodiesel policies in top producers Indonesia and Malaysia as more of the tropical oil is snapped up to produce the "greener" fuel. Biodiesel mandates in soy producing Brazil and Argentina would harden rival soyoil prices tracked by palm oil.
Global biofuel demand is expected to increase by at least 2.5 million tonnes next year, leading analyst Dorab Mistry said at the Indonesia Palm Oil Conference and Price Outlook, and could lift palm oil prices to 3,000 ringgit per tonne by March 2014.
"The demand for biodiesel has increased and the timely implementation of higher biodiesel mandates in Malaysia and Indonesia may provide a boost to the palm oil sector," said the world's largest oil palm planter by landbank, Sime Darby Bhd , in a results statement on Friday.
But traders say the palm market needs more than biodiesel demand for prices to rally as bigger supplies of the tropical oil drag.
"According to the latest estimates, Malaysia could produce about 4-4.5 percent more than 2012. That's why each time the market tries to rally, it cannot reach 2,700 ringgit. Every attempt ends up with profit-taking," the Malaysia-based trader added.
The No.2 producer churned out 18.79 million tonnes of palm oil in 2012, and is expected to see about 19.4 million tonnes in 2013 and 19.5 million tonnes in 2014 as replanting schemes take root, according to industry regulator the Malaysian Palm Oil Board.
Technicals showed a bullish target at 2,692 ringgit per tonne for Malaysian palm oil, as a correction from a Nov. 22 high has been completed, Reuters market analyst Wang Tao said.
In other markets, Brent crude firmed slightly on Friday and was set to post the biggest monthly gain since August as prolonged unrest in Libya kept supply disruptions in focus.
In competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodities Exchange rose 1 percent in late Asian trade. The U.S. soyoil market was closed for the Thanksgiving holiday.
Palm, soy and crude oil prices at 1037 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2615 -5.00 2610 2620 228
MY PALM OIL JAN4 2649 -6.00 2641 2674 2523
MY PALM OIL FEB4 2653 -3.00 2644 2678 16242
CHINA PALM OLEIN MAY4 6366 +40.00 6312 6370 756338
CHINA SOYOIL MAY4 7330 +74.00 7256 7334 835558
CBOT SOY OIL JAN4 40.35 +0.00 0.00 0.00 0
NYMEX CRUDE JAN4 92.61 +0.31 92.06 92.64 22771
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=3.22 Malaysian ringgit)