MARKET DEVELOPMENT
VEGOILS-Palm Rises for 2nd Day as Lower Output May Cut Supplies
VEGOILS-Palm Rises for 2nd Day as Lower Output May Cut Supplies
17/01/2014 (Reuters) - Malaysian palm oil edged up on Thursday, rising for a second straight session as a seasonal drop in production is likely to cut excess supplies, although gains were capped by weak demand.
There was additional support for the palm oil market stemming from U.S. soybean futures, which rose for a sixth session as strong demand for U.S. stocks continued to underpin the market.
The benchmark April palm oil contract on the Bursa Malaysia Derivatives Exchange rose 9 ringgit to 2,546 ringgit a tonne by the midday break. The volume stood at 14,035 lots.
"Production is coming down, so the supply might get tighter in the coming months," said a trader with foreign commodities brokerage. "But prices will ultimately depend on demand which is not very strong at the moment."
The market fell to its lowest in more than two months on Monday amid concerns over weak demand.
Exports of palm oil products from Jan. 1 to 15 fell 28.1 percent to 460,248 tonnes from 640,240 tonnes shipped during Dec. 1 to 15, cargo surveyor Intertek Testing Services said.
Another surveyor, SGS, reported exports during the period fell 27.4 percent to 467,817 tonnes from 644,556 tonnes shipped during Dec. 1-15.
On the technical front, palm oil is expected to gain further to 2,555 ringgit per tonne, as it has cleared a resistance at 2,520 ringgit, according to Wang Tao, a Reuters market analyst.
A wave c that started at the Jan. 2 high of 2,669 ringgit has completed and will be further reversed by the current rebound. A Fibonacci projection analysis on the wave c reveals that the rebound has gone above 2,520 ringgit, the 100 percent projection level.
Malaysia's palm oil inventories rose to a nine-month high in December, industry data showed, missing expectations for a drop as lacklustre demand offset a fall in output caused by floods.
The market is also keeping a close watch on the ringgit currency which is weakening and it could boost margins of refiners.
"It is possible that refiners might start chasing crude palm oil to cover their supplies if the ringgit weakens," the trader said.
In other markets, Brent fell below $107 a barrel as expectations of more supply from the Middle East and North Africa outweighed a large drop in U.S. crude stockpiles.
In competing vegetable oil markets, the U.S. soyoil contract for March eased 0.4 percent in Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange was little changed.
Palm, soy and crude oil prices at 0501 GMT
Contract Month Last Change Low High Volume
M'ASIA PALM OIL FEB4 2515 +8.00 2511 2517 457
M'ASIA PALM OIL MAR4 2533 +9.00 2524 2537 3938
M'ASIA PALM OIL APR4 2546 +9.00 2537 2551 6301
M'ASIA PALM OIL MAY4 2555 +11.00 2544 2557 1064
DALIAN SOY OIL MAY4 6626 +6.00 6622 6650 194262
CBOT SOY OIL MAR4 37.83 -0.16 37.81 37.99 1502
NYMEX CRUDE FEB4 94.20 +0.03 94.10 94.39 2638
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil in Chinese yuan per tonne
Crude in U.S. dollars per barrel
There was additional support for the palm oil market stemming from U.S. soybean futures, which rose for a sixth session as strong demand for U.S. stocks continued to underpin the market.
The benchmark April palm oil contract on the Bursa Malaysia Derivatives Exchange rose 9 ringgit to 2,546 ringgit a tonne by the midday break. The volume stood at 14,035 lots.
"Production is coming down, so the supply might get tighter in the coming months," said a trader with foreign commodities brokerage. "But prices will ultimately depend on demand which is not very strong at the moment."
The market fell to its lowest in more than two months on Monday amid concerns over weak demand.
Exports of palm oil products from Jan. 1 to 15 fell 28.1 percent to 460,248 tonnes from 640,240 tonnes shipped during Dec. 1 to 15, cargo surveyor Intertek Testing Services said.
Another surveyor, SGS, reported exports during the period fell 27.4 percent to 467,817 tonnes from 644,556 tonnes shipped during Dec. 1-15.
On the technical front, palm oil is expected to gain further to 2,555 ringgit per tonne, as it has cleared a resistance at 2,520 ringgit, according to Wang Tao, a Reuters market analyst.
A wave c that started at the Jan. 2 high of 2,669 ringgit has completed and will be further reversed by the current rebound. A Fibonacci projection analysis on the wave c reveals that the rebound has gone above 2,520 ringgit, the 100 percent projection level.
Malaysia's palm oil inventories rose to a nine-month high in December, industry data showed, missing expectations for a drop as lacklustre demand offset a fall in output caused by floods.
The market is also keeping a close watch on the ringgit currency which is weakening and it could boost margins of refiners.
"It is possible that refiners might start chasing crude palm oil to cover their supplies if the ringgit weakens," the trader said.
In other markets, Brent fell below $107 a barrel as expectations of more supply from the Middle East and North Africa outweighed a large drop in U.S. crude stockpiles.
In competing vegetable oil markets, the U.S. soyoil contract for March eased 0.4 percent in Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange was little changed.
Palm, soy and crude oil prices at 0501 GMT
Contract Month Last Change Low High Volume
M'ASIA PALM OIL FEB4 2515 +8.00 2511 2517 457
M'ASIA PALM OIL MAR4 2533 +9.00 2524 2537 3938
M'ASIA PALM OIL APR4 2546 +9.00 2537 2551 6301
M'ASIA PALM OIL MAY4 2555 +11.00 2544 2557 1064
DALIAN SOY OIL MAY4 6626 +6.00 6622 6650 194262
CBOT SOY OIL MAR4 37.83 -0.16 37.81 37.99 1502
NYMEX CRUDE FEB4 94.20 +0.03 94.10 94.39 2638
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil in Chinese yuan per tonne
Crude in U.S. dollars per barrel