MARKET DEVELOPMENT
VEGOILS-Palm Rises to More Than 2-Wk High Ahead of Key Stocks Report
VEGOILS-Palm Rises to More Than 2-Wk High Ahead of Key Stocks Report
09/12/2013 (Reuters) - Malaysian palm oil futures rose to their highest in more than two weeks on Monday as investors covered short positions ahead of a key industry report in the world's No.2 producer, while severe floods stoked concerns of tighter supplies of the edible oil.
Prices were also buoyed by a forecast that palm output fell steeply in November, which would help keep stocks in check despite a lull in exports.
A group of planters on Friday predicted that Malaysian palm oil production plunged nearly 11 percent from a month ago - compared to market expectations of a 1-percent fall.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release official data on Malaysia's November end-stocks, output and exports on Tuesday. A Reuters poll of traders and planters showed that stocks likely climbed to 1.98 million tonnes from the current 1.85 million tonnes.
"The strong upward climb can mostly be attributed to short-covering ahead of the MPOB report tomorrow," said a trader with a local commodities brokerage.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as high as 2,689 ringgit ($835) per tonne early Monday, the highest since Nov. 22, Prices then settled at 2,670 ringgit by the midday break - unchanged from the previous session.
Total traded volume stood at 8,676 lots of 25 tonnes, below the average 12,500 lots.
Monsoon floods in major palm-growing states of Johor, Pahang and Peninsular Malaysia's eastern coast have disrupted harvesting and transportation of fresh fruit, potentially lowering the quality of crude oil and tightening supplies.
"The immediate affect is a short-term drop in production as well as higher levels of free fatty acids in crude palm oil," said a trader with a foreign commodities brokerage.
Higher free fatty acids (FFA) impact the quality of palm oil and require bigger refining costs, which may force some refiners to turn away output from flood-hit plantations.
"Logistics will definitely be affected, it's just a matter of how serious it is. Supply disruption will be supportive to prices in the short term," the trader added.
Nearly 60,000 people had been evacuated from flood-hit areas as of Monday, according to local media reports.
In other markets, Brent crude oil futures held near $112 a barrel on Monday, underpinned by upbeat economic data from the United States and China, the world's first and second largest oil consumers.
In competing vegetable oil markets, the U.S. soyoil contract for January rose 0.5 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange gained 0.2 percent.
Palm, soy and crude oil prices at 0518 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2630 +1.00 2600 2640 160
MY PALM OIL JAN4 2659 +1.00 2655 2675 268
MY PALM OIL FEB4 2670 +0.00 2661 2689 5345
CHINA PALM OLEIN MAY4 6262 +98.00 6192 6274 717096
CHINA SOYOIL MAY4 7236 +16.00 7216 7258 514402
CBOT SOY OIL JAN4 40.71 +0.22 40.51 40.72 1938
NYMEX CRUDE JAN4 97.84 +0.19 97.62 97.90 2853
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)
Prices were also buoyed by a forecast that palm output fell steeply in November, which would help keep stocks in check despite a lull in exports.
A group of planters on Friday predicted that Malaysian palm oil production plunged nearly 11 percent from a month ago - compared to market expectations of a 1-percent fall.
Industry regulator the Malaysian Palm Oil Board (MPOB) will release official data on Malaysia's November end-stocks, output and exports on Tuesday. A Reuters poll of traders and planters showed that stocks likely climbed to 1.98 million tonnes from the current 1.85 million tonnes.
"The strong upward climb can mostly be attributed to short-covering ahead of the MPOB report tomorrow," said a trader with a local commodities brokerage.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange rose as high as 2,689 ringgit ($835) per tonne early Monday, the highest since Nov. 22, Prices then settled at 2,670 ringgit by the midday break - unchanged from the previous session.
Total traded volume stood at 8,676 lots of 25 tonnes, below the average 12,500 lots.
Monsoon floods in major palm-growing states of Johor, Pahang and Peninsular Malaysia's eastern coast have disrupted harvesting and transportation of fresh fruit, potentially lowering the quality of crude oil and tightening supplies.
"The immediate affect is a short-term drop in production as well as higher levels of free fatty acids in crude palm oil," said a trader with a foreign commodities brokerage.
Higher free fatty acids (FFA) impact the quality of palm oil and require bigger refining costs, which may force some refiners to turn away output from flood-hit plantations.
"Logistics will definitely be affected, it's just a matter of how serious it is. Supply disruption will be supportive to prices in the short term," the trader added.
Nearly 60,000 people had been evacuated from flood-hit areas as of Monday, according to local media reports.
In other markets, Brent crude oil futures held near $112 a barrel on Monday, underpinned by upbeat economic data from the United States and China, the world's first and second largest oil consumers.
In competing vegetable oil markets, the U.S. soyoil contract for January rose 0.5 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange gained 0.2 percent.
Palm, soy and crude oil prices at 0518 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 2630 +1.00 2600 2640 160
MY PALM OIL JAN4 2659 +1.00 2655 2675 268
MY PALM OIL FEB4 2670 +0.00 2661 2689 5345
CHINA PALM OLEIN MAY4 6262 +98.00 6192 6274 717096
CHINA SOYOIL MAY4 7236 +16.00 7216 7258 514402
CBOT SOY OIL JAN4 40.71 +0.22 40.51 40.72 1938
NYMEX CRUDE JAN4 97.84 +0.19 97.62 97.90 2853
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)