MARKET DEVELOPMENT
VEGOILS-Palm Oil Hits Near 6-week High on Prospects of Better Demand
VEGOILS-Palm Oil Hits Near 6-week High on Prospects of Better Demand
13/02/2014 (Reuters) - Malaysian palm oil futures edged up on Wednesday to hit a near six-week high as investors looked to improving food and fuel demand for the tropical oil amid tighter supplies.
Palm oil stocks in Malaysia fell to 1.93 million tonnes in January after rising for the past six months, industry data showed, due to seasonally slowing output in the world's second-largest grower.
"We know that end-stocks are slowing down, and the market is confident that exports will be better than last month," said a trader with a foreign commodities brokerage.
Firmer crude oil prices also provided some support for palm by making the tropical oil a more attractive option as a biodiesel feedstock.
Brent crude edged higher towards $109 a barrel after data showed Chinese oil imports hit a record high last month, raising hopes of strengthening demand from the world's second-largest economy.
"If crude oil is expensive, then there will be demand for biodiesel. As time goes by, investors will add to their positions ... the underlying fundamentals are a bit bullish now," the trader added.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange had edged up 1.0 percent to 2,634 ringgit ($793) per tonne by Wednesday's close, hitting the highest level since Jan. 3.
Prices traded in a range between 2,609 and 2,636 ringgit.
Traded volume stood at 36,924 lots of 25 tonnes, higher than the usual 35,000 lots after buying interest picked up in the late session.
"At the start of the day market participants were cautious, that's why volumes were thin. But later in the day interest picked up, especially after the market traded above 2,622 ringgit," the Malaysia-based trader added.
Exports of Malaysian palm oil products from Feb. 1-10 rose 4-8 percent from a month ago, cargo surveyors reported, with some investors expecting shipment volumes to improve further later in the month.
Malaysian average palm prices could climb for a second straight year to 2,700 ringgit in 2014, a Reuters poll showed, as strong demand from the biofuel industry eats into supplies from top producers Indonesia and Malaysia.
But forecasts for bumper production of rival soyoil, as well as seasonally higher palm output in Malaysia from June onwards, could drag on prices, the poll showed.
In vegetable oil markets tracked by palm, the U.S. soyoil contract for March rose 0.2 percent in late Asian trade, while the most-active May soybean oil contract on the Dalian Commodities Exchange also gained 0.2 percent.
Palm, soy and crude oil prices at 1031 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2620 +18.00 2610 2620 29
MY PALM OIL MAR4 2632 +18.00 2609 2632 2263
MY PALM OIL APR4 2634 +25.00 2609 2636 13831
CHINA PALM OLEIN MAY4 5886 +34.00 5848 5888 236692
CHINA SOYOIL MAY4 6644 +12.00 6612 6660 296998
CBOT SOY OIL MAR4 38.93 +0.08 38.68 39.06 4795
NYMEX CRUDE MAR4 100.65 +0.71 100.21 100.69 14596
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 = 3.32 Malaysian ringgit)
Palm oil stocks in Malaysia fell to 1.93 million tonnes in January after rising for the past six months, industry data showed, due to seasonally slowing output in the world's second-largest grower.
"We know that end-stocks are slowing down, and the market is confident that exports will be better than last month," said a trader with a foreign commodities brokerage.
Firmer crude oil prices also provided some support for palm by making the tropical oil a more attractive option as a biodiesel feedstock.
Brent crude edged higher towards $109 a barrel after data showed Chinese oil imports hit a record high last month, raising hopes of strengthening demand from the world's second-largest economy.
"If crude oil is expensive, then there will be demand for biodiesel. As time goes by, investors will add to their positions ... the underlying fundamentals are a bit bullish now," the trader added.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange had edged up 1.0 percent to 2,634 ringgit ($793) per tonne by Wednesday's close, hitting the highest level since Jan. 3.
Prices traded in a range between 2,609 and 2,636 ringgit.
Traded volume stood at 36,924 lots of 25 tonnes, higher than the usual 35,000 lots after buying interest picked up in the late session.
"At the start of the day market participants were cautious, that's why volumes were thin. But later in the day interest picked up, especially after the market traded above 2,622 ringgit," the Malaysia-based trader added.
Exports of Malaysian palm oil products from Feb. 1-10 rose 4-8 percent from a month ago, cargo surveyors reported, with some investors expecting shipment volumes to improve further later in the month.
Malaysian average palm prices could climb for a second straight year to 2,700 ringgit in 2014, a Reuters poll showed, as strong demand from the biofuel industry eats into supplies from top producers Indonesia and Malaysia.
But forecasts for bumper production of rival soyoil, as well as seasonally higher palm output in Malaysia from June onwards, could drag on prices, the poll showed.
In vegetable oil markets tracked by palm, the U.S. soyoil contract for March rose 0.2 percent in late Asian trade, while the most-active May soybean oil contract on the Dalian Commodities Exchange also gained 0.2 percent.
Palm, soy and crude oil prices at 1031 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB4 2620 +18.00 2610 2620 29
MY PALM OIL MAR4 2632 +18.00 2609 2632 2263
MY PALM OIL APR4 2634 +25.00 2609 2636 13831
CHINA PALM OLEIN MAY4 5886 +34.00 5848 5888 236692
CHINA SOYOIL MAY4 6644 +12.00 6612 6660 296998
CBOT SOY OIL MAR4 38.93 +0.08 38.68 39.06 4795
NYMEX CRUDE MAR4 100.65 +0.71 100.21 100.69 14596
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 = 3.32 Malaysian ringgit)