MARKET DEVELOPMENT
VEGOILS-Palm Falls After Weak Exports, Investors Wary Despite Friendly Price Outlook
VEGOILS-Palm Falls After Weak Exports, Investors Wary Despite Friendly Price Outlook
03/12/2013 (Reuters) - Malaysian palm oil futures ended lower on Monday after weaker-than-expected export demand made investors more cautious about taking risky bets, but losses were contained by hopes that rising biofuel consumption would keep prices supported.
Exports of Malaysian palm oil products fell 4.8 percent to 1.45 million tonnes in November, compared with October, cargo surveyor Intertek Testing Services showed, signalling dwindling demand for the tropical oil as winter rolls in.
Another cargo surveyor reported that shipments in the same period fell 4.9 percent.
Despite palm's nature to solidify in cold temperatures, market participants had initially expected exports to only weaken slightly towards the year-end as world's second-largest consumer China re-stocked ahead of a festival next year.
"The market is in a very tight range today, and investors are looking for more developments before they can move. What came out from the Bandung conference is more of the long term," said a trader with a foreign commodities brokerage.
Bullish outlooks from leading analysts at a industry gathering in Indonesia last week had stoked optimism that higher biofuel mandates could lift prices in the first quarter next year.
By Monday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged down 0.5 percent to 2,642 ringgit ($823) per tonne, with prices rangebound in a tight range between 2,629-2,659 ringgit.
Total traded volume stood at 30,701 lots of 25 tonnes, lower than the average 35,000 lots.
Technicals showed Malaysian palm oil may retrace to 2,620 ringgit per tonne, before resuming its rise towards a bullish target at 2,692 ringgit, Reuters market analyst Wang Tao said.
Market players are also concerned that rising palm oil prices, which have climbed nearly 9 percent so far this year, could narrow the spread between competing edible oils and channel demand to rival soyoil.
"While we are bullish on crude palm oil prices, we believe prices should only increase to 2,900 ringgit per tonne in the most optimistic scenario as soybean oil will start to compete very aggressively with crude palm oil at this level," said Kenanga Investment Bank analyst Alan Lim in a note.
Palm olein POL-MYRBD-M1 currently trades at about a $80 discount to soyoil narrower than $125 in September and $300 at the start of the year.
"The rise in prices is without the help of soyoil and narrowed palm's discount sharply. We are not in the favour of the bullish view and would like to maintain a sideways market within 2,500-2,750 ringgit," a Malaysia-based trader with a local commodities brokerage said.
In other markets, Brent crude oil climbed towards $110 a barrel on Monday after Chinese data showed strong industrial activity and as social and political unrest in Libya limited supply from the key North African producer.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.5 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 0.3 percent.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2601 -14.00 2595 2601 208
MY PALM OIL JAN4 2635 -15.00 2624 2653 3197
MY PALM OIL FEB4 2642 -12.00 2629 2659 15242
CHINA PALM OLEIN MAY4 6304 -34.00 6290 6370 833512
CHINA SOYOIL MAY4 7316 +24.00 7312 7362 950454
CBOT SOY OIL JAN4 40.60 +0.14 40.46 40.74 6901
NYMEX CRUDE JAN4 92.74 +0.02 92.64 93.31 13121
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)
Exports of Malaysian palm oil products fell 4.8 percent to 1.45 million tonnes in November, compared with October, cargo surveyor Intertek Testing Services showed, signalling dwindling demand for the tropical oil as winter rolls in.
Another cargo surveyor reported that shipments in the same period fell 4.9 percent.
Despite palm's nature to solidify in cold temperatures, market participants had initially expected exports to only weaken slightly towards the year-end as world's second-largest consumer China re-stocked ahead of a festival next year.
"The market is in a very tight range today, and investors are looking for more developments before they can move. What came out from the Bandung conference is more of the long term," said a trader with a foreign commodities brokerage.
Bullish outlooks from leading analysts at a industry gathering in Indonesia last week had stoked optimism that higher biofuel mandates could lift prices in the first quarter next year.
By Monday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged down 0.5 percent to 2,642 ringgit ($823) per tonne, with prices rangebound in a tight range between 2,629-2,659 ringgit.
Total traded volume stood at 30,701 lots of 25 tonnes, lower than the average 35,000 lots.
Technicals showed Malaysian palm oil may retrace to 2,620 ringgit per tonne, before resuming its rise towards a bullish target at 2,692 ringgit, Reuters market analyst Wang Tao said.
Market players are also concerned that rising palm oil prices, which have climbed nearly 9 percent so far this year, could narrow the spread between competing edible oils and channel demand to rival soyoil.
"While we are bullish on crude palm oil prices, we believe prices should only increase to 2,900 ringgit per tonne in the most optimistic scenario as soybean oil will start to compete very aggressively with crude palm oil at this level," said Kenanga Investment Bank analyst Alan Lim in a note.
Palm olein POL-MYRBD-M1 currently trades at about a $80 discount to soyoil narrower than $125 in September and $300 at the start of the year.
"The rise in prices is without the help of soyoil and narrowed palm's discount sharply. We are not in the favour of the bullish view and would like to maintain a sideways market within 2,500-2,750 ringgit," a Malaysia-based trader with a local commodities brokerage said.
In other markets, Brent crude oil climbed towards $110 a barrel on Monday after Chinese data showed strong industrial activity and as social and political unrest in Libya limited supply from the key North African producer.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.5 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 0.3 percent.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2601 -14.00 2595 2601 208
MY PALM OIL JAN4 2635 -15.00 2624 2653 3197
MY PALM OIL FEB4 2642 -12.00 2629 2659 15242
CHINA PALM OLEIN MAY4 6304 -34.00 6290 6370 833512
CHINA SOYOIL MAY4 7316 +24.00 7312 7362 950454
CBOT SOY OIL JAN4 40.60 +0.14 40.46 40.74 6901
NYMEX CRUDE JAN4 92.74 +0.02 92.64 93.31 13121
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)