MARKET DEVELOPMENT
VEGOILS-Palm Hits Near 2-mth Low on High Stock Worries, Weak Soy Markets
VEGOILS-Palm Hits Near 2-mth Low on High Stock Worries, Weak Soy Markets
09/01/2014 (Reuters) - Malaysian palm oil futures hit a near two-month low on Wednesday as worries that rising vegetable oil supplies may outstrip global demand curbed buying sentiment and prompted some investors to liquidate positions.
Prices were also pressured by continued weakness in the U.S. and China soy markets and extended losses into a fifth straight day. Cheaper soy oil narrows palm's discount to the rival oil, potentially channelling some food and fuel demand away.
A Reuters poll of planters and traders showed Malaysian palm oil stocks in December likely eased for the first time in six months after monsoon rains dented production, but weaker export demand stemmed the fall and kept inventories elevated.
"Stocks are still relatively high everywhere, even in Indonesia. The market needs some demand appearing before it can climb," said a trader with a foreign commodities brokerage.
"That's the reason why investors are liquidating their positions. They might be trying to break the 2,500 ringgit level now," the Malaysia-based trader added.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange hit a low of 2,530 ringgit in late trade on Wednesday, the lowest since Nov. 12. Prices then settled at 2,548 ringgit ($779) per tonne by the day's close, a 0.5 percent drop from the previous session.
Total traded volume stood at 47,368 lots of 25 tonnes, much higher than the usual 35,000 lots.
Technicals showed Malaysian palm oil may fall more to 2,520 ringgit per tonne, after a moderate rebound to 2,577 ringgit, Reuters market analyst Wang Tao said.
Industry regulator Malaysia's Palm Oil Board (MPOB) will release official data on stocks, exports and output in the world's No.2 producer on Friday.
"Palm prices could continue to tread water as traders await Friday's MPOB and USDA reports," said a trader with a local commodities brokerage.
"Prices are likely to grind lower through the first quarter of 2014 with forecasts for bigger crops limiting buying enthusiasm," the trader added.
Chicago soybeans edged lower on Wednesday on expectations the U.S. Department of Agriculture will raise its forecast for global inventories later this week. Analysts said there is additional pressure on soybeans with expectations of bumper production in Brazil and Argentina.
In competing vegetable oil markets, the U.S. soyoil contract for March edged down 0.6 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange lost 0.4 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2520 -10.00 2493 2524 473
MY PALM OIL FEB4 2531 -11.00 2512 2543 6336
MY PALM OIL MAR4 2548 -13.00 2530 2564 21202
CHINA PALM OLEIN MAY4 5786 -158.00 5776 5930 899106
CHINA SOYOIL MAY4 6608 -24.00 6574 6628 693480
CBOT SOY OIL MAR4 37.69 -0.24 37.68 37.94 4978
NYMEX CRUDE FEB4 93.78 +0.11 93.70 94.18 8947
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=3.27 Malaysian ringgit)
Prices were also pressured by continued weakness in the U.S. and China soy markets and extended losses into a fifth straight day. Cheaper soy oil narrows palm's discount to the rival oil, potentially channelling some food and fuel demand away.
A Reuters poll of planters and traders showed Malaysian palm oil stocks in December likely eased for the first time in six months after monsoon rains dented production, but weaker export demand stemmed the fall and kept inventories elevated.
"Stocks are still relatively high everywhere, even in Indonesia. The market needs some demand appearing before it can climb," said a trader with a foreign commodities brokerage.
"That's the reason why investors are liquidating their positions. They might be trying to break the 2,500 ringgit level now," the Malaysia-based trader added.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange hit a low of 2,530 ringgit in late trade on Wednesday, the lowest since Nov. 12. Prices then settled at 2,548 ringgit ($779) per tonne by the day's close, a 0.5 percent drop from the previous session.
Total traded volume stood at 47,368 lots of 25 tonnes, much higher than the usual 35,000 lots.
Technicals showed Malaysian palm oil may fall more to 2,520 ringgit per tonne, after a moderate rebound to 2,577 ringgit, Reuters market analyst Wang Tao said.
Industry regulator Malaysia's Palm Oil Board (MPOB) will release official data on stocks, exports and output in the world's No.2 producer on Friday.
"Palm prices could continue to tread water as traders await Friday's MPOB and USDA reports," said a trader with a local commodities brokerage.
"Prices are likely to grind lower through the first quarter of 2014 with forecasts for bigger crops limiting buying enthusiasm," the trader added.
Chicago soybeans edged lower on Wednesday on expectations the U.S. Department of Agriculture will raise its forecast for global inventories later this week. Analysts said there is additional pressure on soybeans with expectations of bumper production in Brazil and Argentina.
In competing vegetable oil markets, the U.S. soyoil contract for March edged down 0.6 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange lost 0.4 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2520 -10.00 2493 2524 473
MY PALM OIL FEB4 2531 -11.00 2512 2543 6336
MY PALM OIL MAR4 2548 -13.00 2530 2564 21202
CHINA PALM OLEIN MAY4 5786 -158.00 5776 5930 899106
CHINA SOYOIL MAY4 6608 -24.00 6574 6628 693480
CBOT SOY OIL MAR4 37.69 -0.24 37.68 37.94 4978
NYMEX CRUDE FEB4 93.78 +0.11 93.70 94.18 8947
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=3.27 Malaysian ringgit)