MARKET DEVELOPMENT
VEGOILS-Palm Oil Firms, but Stronger Ringgit Curbs Gains
VEGOILS-Palm Oil Firms, but Stronger Ringgit Curbs Gains
06/02/2014 (Reuters) - Malaysian palm oil futures ended higher on Wednesday as investors short-covered positions following some speculative selling in the previous session, but a stronger ringgit curbed gains and kept prices locked in range-bound trade.
The Malaysian ringgit inched up 0.29 percent to trade at 3.3190 against the greenback late Wednesday, eating into margins for overseas buyers and refiners.
Trade volumes were still thin with many market players away for the Lunar New Year holidays.
"The market is still staying within the 2,500-2,600 ringgit range," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"When prices get closer to 2,500 ringgit, people see it as an opportunity to buy. And when it moves to 2,600 ringgit it's a sell. I don't think the market is really going anywhere for now," the trader said.
By Wednesday's close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,544 ringgit ($769) per tonne. Prices held in a range of 2,533 to 2,553 ringgit.
Total traded volume stood at only 21,861 lots of 25 tonnes, much below the average 35,000 lots.
Technicals showed that Malaysian palm oil seems to have stabilised around its Jan. 28 low of 2,514 ringgit per tonne, and is expected to test resistance at 2,570 ringgit, said Reuters market analyst Wang Tao.
Lingering concerns of weak demand for the tropical oil also weighed on investor sentiment.
Malaysia's January palm oil exports fell 11 percent from a month ago to about 1.3 million tonnes shipped, cargo surveyor data showed, raising worries that end-stocks in the second-largest producer will continue to climb from the current 1.99 million tonnes.
Some market participants are hoping that palm oil supply in January would have fallen as well, as trees enter a seasonally slower production cycle that is expected to last through the first half of the year.
"Some say production could even go down by double digits compared with last month," said another trader with a foreign commodities brokerage. "If that is true then stocks should be much lower than December."
In other markets, Brent crude rose above $106 a barrel on Wednesday following gains in the U.S. oil benchmark after an industry report showed lower inventories at the U.S. delivery point and robust heating fuel demand from cold weather.
In other competing vegetable oil markets, the U.S. soyoil contract for March rose 0.5 percent in late Asian trade. The Dalian Commodities Exchange is closed for the Lunar New Year and will re-open on Feb. 7.
Palm, soy and crude oil prices at 1003 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2545 +24.00 2528 2545 279
MY PALM OIL MAR4 2543 +16.00 2532 2548 2577
MY PALM OIL APR4 2544 +15.00 2533 2553 8097
CHINA PALM OLEIN MAY4 5672 -28.00 5630 5704 209596
CHINA SOYOIL MAY4 6390 -76.00 6370 6432 299596
CBOT SOY OIL MAR4 37.88 +0.17 37.50 37.95 7590
NYMEX CRUDE MAR4 98.19 +1.00 97.53 98.26 13608
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 = 3.31 Malaysian ringgit)
The Malaysian ringgit inched up 0.29 percent to trade at 3.3190 against the greenback late Wednesday, eating into margins for overseas buyers and refiners.
Trade volumes were still thin with many market players away for the Lunar New Year holidays.
"The market is still staying within the 2,500-2,600 ringgit range," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"When prices get closer to 2,500 ringgit, people see it as an opportunity to buy. And when it moves to 2,600 ringgit it's a sell. I don't think the market is really going anywhere for now," the trader said.
By Wednesday's close, the benchmark April contract on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,544 ringgit ($769) per tonne. Prices held in a range of 2,533 to 2,553 ringgit.
Total traded volume stood at only 21,861 lots of 25 tonnes, much below the average 35,000 lots.
Technicals showed that Malaysian palm oil seems to have stabilised around its Jan. 28 low of 2,514 ringgit per tonne, and is expected to test resistance at 2,570 ringgit, said Reuters market analyst Wang Tao.
Lingering concerns of weak demand for the tropical oil also weighed on investor sentiment.
Malaysia's January palm oil exports fell 11 percent from a month ago to about 1.3 million tonnes shipped, cargo surveyor data showed, raising worries that end-stocks in the second-largest producer will continue to climb from the current 1.99 million tonnes.
Some market participants are hoping that palm oil supply in January would have fallen as well, as trees enter a seasonally slower production cycle that is expected to last through the first half of the year.
"Some say production could even go down by double digits compared with last month," said another trader with a foreign commodities brokerage. "If that is true then stocks should be much lower than December."
In other markets, Brent crude rose above $106 a barrel on Wednesday following gains in the U.S. oil benchmark after an industry report showed lower inventories at the U.S. delivery point and robust heating fuel demand from cold weather.
In other competing vegetable oil markets, the U.S. soyoil contract for March rose 0.5 percent in late Asian trade. The Dalian Commodities Exchange is closed for the Lunar New Year and will re-open on Feb. 7.
Palm, soy and crude oil prices at 1003 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2545 +24.00 2528 2545 279
MY PALM OIL MAR4 2543 +16.00 2532 2548 2577
MY PALM OIL APR4 2544 +15.00 2533 2553 8097
CHINA PALM OLEIN MAY4 5672 -28.00 5630 5704 209596
CHINA SOYOIL MAY4 6390 -76.00 6370 6432 299596
CBOT SOY OIL MAR4 37.88 +0.17 37.50 37.95 7590
NYMEX CRUDE MAR4 98.19 +1.00 97.53 98.26 13608
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 = 3.31 Malaysian ringgit)