MARKET DEVELOPMENT
VEGOILS-Palm Ends Higher on Lower Output Estimates, Flood Woes
VEGOILS-Palm Ends Higher on Lower Output Estimates, Flood Woes
07/12/2013 (Reuters) - Malaysian palm oil futures ended higher on Friday on growers' estimates that output in the world's No. 2 producer had fallen steeply, and on floods that could delay harvesting.
Traders said the Malaysian Palm Oil Association (MPOA), a group of planters, forecast that the country's palm oil output plunged nearly 11 percent in November from a month ago - far below market expectations of a 1 percent fall.
"The market was pushed higher on speculative buying especially with the news from MPOA," said a trader with a foreign commodities brokerage.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange climbed 1 percent to 2,667 ringgit ($826) per tonne by Friday's close, lifting prices to their fourth straight weekly gain with a 0.5 percent rise.
Total traded volume stood at 29,566 lots of 25 tonnes, below the average 35,000 lots.
Prices earlier fell to as low as 2,630 ringgit in morning trade as investors fretted that stocks in Malaysia could have risen to their highest since March.
A Reuters poll on Thursday showed that Malaysian palm oil inventories likely climbed to 1.98 million tonnes in November, as a hiccup in production did little to offset softer winter demand for the tropical oil.
Prices were also boosted by concerns that monsoon floods in the states of Johor, Pahang and Peninsular Malaysia's eastern coast would complicate palm oil harvesting and cause logistical problems.
Planters typically delay harvesting during heavy rains and thunderstorms, as fruits that have to be immediately transported to mills get stuck on flooded roads, reducing their quality.
"Nobody wants to harvest on rainy days because it's not going to help the quality," the Kuala Lumpur-based trader added.
"It's better to leave the fruits on the tree than harvest it now, because the acidity levels will
More than 40,000 people have been evacuated from flood-hit areas as of Friday compared to just 1,000 on Tuesday, according to local media reports, with no reprieve in sight because of high tides and rough seas.
In other markets, Brent crude rose above $111 a barrel on Friday after a two-day drop, as severe weather cut oil output in Europe and the United States, and with traders waiting for a U.S. jobs report.
In competing vegetable oil markets, the U.S. soyoil contract for January rose 0.6 percent in late Asian trade, lending additional support to palm prices. The most active May soybean oil contract on the Dalian Commodities Exchange dropped 0.5 percent.
Palm, soy and crude oil prices at 1022 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2628 +26.00 2590 2628 344
MY PALM OIL JAN4 2655 +27.00 2620 2662 2595
MY PALM OIL FEB4 2667 +26.00 2630 2673 15716
CHINA PALM OLEIN MAY4 6182 -50.00 6122 6196 791358
CHINA SOYOIL MAY4 7232 -34.00 7190 7242 812380
CBOT SOY OIL JAN4 40.84 +0.23 40.40 40.96 14444
NYMEX CRUDE JAN4 97.27 -0.11 97.15 97.49 12804
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=3.23 Malaysian ringgit)
Traders said the Malaysian Palm Oil Association (MPOA), a group of planters, forecast that the country's palm oil output plunged nearly 11 percent in November from a month ago - far below market expectations of a 1 percent fall.
"The market was pushed higher on speculative buying especially with the news from MPOA," said a trader with a foreign commodities brokerage.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange climbed 1 percent to 2,667 ringgit ($826) per tonne by Friday's close, lifting prices to their fourth straight weekly gain with a 0.5 percent rise.
Total traded volume stood at 29,566 lots of 25 tonnes, below the average 35,000 lots.
Prices earlier fell to as low as 2,630 ringgit in morning trade as investors fretted that stocks in Malaysia could have risen to their highest since March.
A Reuters poll on Thursday showed that Malaysian palm oil inventories likely climbed to 1.98 million tonnes in November, as a hiccup in production did little to offset softer winter demand for the tropical oil.
Prices were also boosted by concerns that monsoon floods in the states of Johor, Pahang and Peninsular Malaysia's eastern coast would complicate palm oil harvesting and cause logistical problems.
Planters typically delay harvesting during heavy rains and thunderstorms, as fruits that have to be immediately transported to mills get stuck on flooded roads, reducing their quality.
"Nobody wants to harvest on rainy days because it's not going to help the quality," the Kuala Lumpur-based trader added.
"It's better to leave the fruits on the tree than harvest it now, because the acidity levels will
More than 40,000 people have been evacuated from flood-hit areas as of Friday compared to just 1,000 on Tuesday, according to local media reports, with no reprieve in sight because of high tides and rough seas.
In other markets, Brent crude rose above $111 a barrel on Friday after a two-day drop, as severe weather cut oil output in Europe and the United States, and with traders waiting for a U.S. jobs report.
In competing vegetable oil markets, the U.S. soyoil contract for January rose 0.6 percent in late Asian trade, lending additional support to palm prices. The most active May soybean oil contract on the Dalian Commodities Exchange dropped 0.5 percent.
Palm, soy and crude oil prices at 1022 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2628 +26.00 2590 2628 344
MY PALM OIL JAN4 2655 +27.00 2620 2662 2595
MY PALM OIL FEB4 2667 +26.00 2630 2673 15716
CHINA PALM OLEIN MAY4 6182 -50.00 6122 6196 791358
CHINA SOYOIL MAY4 7232 -34.00 7190 7242 812380
CBOT SOY OIL JAN4 40.84 +0.23 40.40 40.96 14444
NYMEX CRUDE JAN4 97.27 -0.11 97.15 97.49 12804
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=3.23 Malaysian ringgit)