MARKET DEVELOPMENT
VEGOILS-Palm Snaps Five Days of Losses on Bargain Hunting
VEGOILS-Palm Snaps Five Days of Losses on Bargain Hunting
17/12/2013 (Reuters) - Malaysian palm oil futures ended higher on Monday, snapping five straight days of losses as weak prices in the morning session attracted bargain hunters, while slightly improving exports and prospects of lower production also supported the market.
Prices in Monday's trade fell as low as 2,550 ringgit per tonne as weak competing soy markets tracked by palm weighed, but losses were later reversed as buyers locked in purchases for the cheaper-priced tropical oil.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange had inched up 0.4 percent to 2,581 ringgit ($797) per tonne by Monday's close.
Total traded volume stood at 28,749 lots of 25 tonnes, below the average 35,000 lots.
"There was no follow-through selling at the 2,550 ringgit level, and there was more buying pressure than selling pressure," said a trader with a local commodities brokerage.
"So once the selling pressure subsided, a lot of buying came in," the Malaysia-based trader added.
A small recovery in exports helped prop up prices. Cargo surveyor Intertek Testing Services showed that Malaysian palm oil shipments in Dec. 1-15 fell 14.1 percent on month, a slight improvement from steeper declines recorded in the first 10 days of December.
Another cargo surveyor Societe Generale de Surveillance showed exports fell 12.2 percent for the same period.
Despite weaker demand from top buyers including Europe and India during the northern winter, traders expect the world's second-largest palm oil consumer China to re-stock ahead of its Lunar New Year festival celebrated at the end of January.
"Exports in the first fifteen days improved a bit. Although it's still down 14 percent, it should improve further because China will buy more palm in the later part of the month," said a trader with a foreign commodities brokerage.
Monsoon rains in Malaysia complicated harvesting in several plantations hit by floods, potentially tightening supplies of the tropical oil and propping up palm prices.
Some market players say output could have fallen nearly 20 percent in the first half of December compared to November.
Malaysia's Meteorological Department on Monday issued a "yellow stage" advisory over the palm-growing states Pahang and Johor, warning of heavy rains from Wednesday until Friday which may cause more floods in low-lying areas.
But continued weakness in competing soy markets tracked by palm put a lid on gains. The U.S. soyoil contract for January fell 0.3 percent in late Asian trade and the most active May soybean oil contract on the Dalian Commodities Exchange fell 1.3 percent.
Malaysia has kept its crude palm oil export tax for January at 5 percent, a government circular showed on Monday, unchanged from December.
In other markets, Brent crude oil rose above $109 a barrel on Monday as supply concerns revived after Libya failed to reach a deal with tribal leaders to end the blockade of several oil-exporting ports.
Palm, soy and crude oil prices at 1026 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2541 +0.00 2515 2546 1084
MY PALM OIL FEB4 2570 +8.00 2540 2573 8150
MY PALM OIL MAR4 2581 +11.00 2550 2584 13802
CHINA PALM OLEIN MAY4 6036 -68.00 6032 6092 610974
CHINA SOYOIL MAY4 7006 -92.00 7002 7074 726966
CBOT SOY OIL JAN4 39.72 -0.11 39.45 39.97 15204
NYMEX CRUDE JAN4 97.06 +0.46 96.21 97.08 13217
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=3.24 Malaysian ringgit)
Prices in Monday's trade fell as low as 2,550 ringgit per tonne as weak competing soy markets tracked by palm weighed, but losses were later reversed as buyers locked in purchases for the cheaper-priced tropical oil.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange had inched up 0.4 percent to 2,581 ringgit ($797) per tonne by Monday's close.
Total traded volume stood at 28,749 lots of 25 tonnes, below the average 35,000 lots.
"There was no follow-through selling at the 2,550 ringgit level, and there was more buying pressure than selling pressure," said a trader with a local commodities brokerage.
"So once the selling pressure subsided, a lot of buying came in," the Malaysia-based trader added.
A small recovery in exports helped prop up prices. Cargo surveyor Intertek Testing Services showed that Malaysian palm oil shipments in Dec. 1-15 fell 14.1 percent on month, a slight improvement from steeper declines recorded in the first 10 days of December.
Another cargo surveyor Societe Generale de Surveillance showed exports fell 12.2 percent for the same period.
Despite weaker demand from top buyers including Europe and India during the northern winter, traders expect the world's second-largest palm oil consumer China to re-stock ahead of its Lunar New Year festival celebrated at the end of January.
"Exports in the first fifteen days improved a bit. Although it's still down 14 percent, it should improve further because China will buy more palm in the later part of the month," said a trader with a foreign commodities brokerage.
Monsoon rains in Malaysia complicated harvesting in several plantations hit by floods, potentially tightening supplies of the tropical oil and propping up palm prices.
Some market players say output could have fallen nearly 20 percent in the first half of December compared to November.
Malaysia's Meteorological Department on Monday issued a "yellow stage" advisory over the palm-growing states Pahang and Johor, warning of heavy rains from Wednesday until Friday which may cause more floods in low-lying areas.
But continued weakness in competing soy markets tracked by palm put a lid on gains. The U.S. soyoil contract for January fell 0.3 percent in late Asian trade and the most active May soybean oil contract on the Dalian Commodities Exchange fell 1.3 percent.
Malaysia has kept its crude palm oil export tax for January at 5 percent, a government circular showed on Monday, unchanged from December.
In other markets, Brent crude oil rose above $109 a barrel on Monday as supply concerns revived after Libya failed to reach a deal with tribal leaders to end the blockade of several oil-exporting ports.
Palm, soy and crude oil prices at 1026 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2541 +0.00 2515 2546 1084
MY PALM OIL FEB4 2570 +8.00 2540 2573 8150
MY PALM OIL MAR4 2581 +11.00 2550 2584 13802
CHINA PALM OLEIN MAY4 6036 -68.00 6032 6092 610974
CHINA SOYOIL MAY4 7006 -92.00 7002 7074 726966
CBOT SOY OIL JAN4 39.72 -0.11 39.45 39.97 15204
NYMEX CRUDE JAN4 97.06 +0.46 96.21 97.08 13217
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=3.24 Malaysian ringgit)