MARKET DEVELOPMENT
VEGOILS-Palm Oil Firms on Strong Exports, Supply Concerns
VEGOILS-Palm Oil Firms on Strong Exports, Supply Concerns
21/02/2014 (Reuters) - Malaysian palm oil futures firmed on Thursday, recovering losses from the previous session to trade around their highest in one-and-a-half years on strong export data and concerns of a drought squeezing supplies.
Dry weather in parts of Malaysia and Indonesia has caused some stress in oil palm trees, traders said, curbing the growth of palm fruit and causing a larger-than-expected drop in output this month.
"It's too dry. Crude palm oil production is most likely down by double digits. The mills are complaining they are not getting enough fresh fruit bunches," said a trader with a foreign commodities brokerage.
Yields could be further hindered in the next few months if there is no relief to the dry spell, the trader added.
By the midday break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged up 0.7 percent to 2,727 ringgit ($826) per tonne, the upper end of Thursday's trading range and the highest since September 2012.
Total traded volume stood at 13,986 lots of 25 tonnes, slightly above the usual 12,500 lots.
A pick-up in demand also buoyed prices of the tropical oil. Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm oil products in Feb. 1-20 rose 16.9 percent to 875,901 tonnes from a month ago, thanks to bigger shipments to top buyer India.
"I am expecting the market to continue to go up. As long as demand shows improvement, like today's numbers, it will give support to the market," the Kuala Lumpur-based trader added.
Technicals were slightly bearish. Malaysian palm oil is expected to retrace to 2,696 ringgit per tonne, as it has temporarily peaked around a resistance at 2,738 ringgit, said Reuters market analyst Wang Tao.
U.S. soybeans edged higher on Thursday, underpinned by concerns over supplies from top exporter Brazil and a lack of Chinese cancellations of U.S. cargoes.
Smaller supplies of the competing oilseed available for crushing would lift soyoil prices, widening the premium over rival palm oil and potentially channelling demand to the tropical oil instead.
In vegetable oil markets tracked by palm, the U.S. soyoil contract for May rose 0.4 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange slipped 0.8 percent.
In other markets, Brent crude slid towards $110 a barrel on Thursday, dragged down by a survey that pointed to slower growth in China, the world's second largest oil consumer.
Another cargo surveyor Societe Generale de Surveillance will release export figures for the same Feb. 1-20 period later in the day.
Palm, soy and crude oil prices at 0457 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2719 +11.00 2702 2726 222
MY PALM OIL APR4 2735 +19.00 2709 2736 1013
MY PALM OIL MAY4 2727 +19.00 2700 2727 8524
CHINA PALM OLEIN MAY4 6052 -68.00 6024 6092 262586
CHINA SOYOIL MAY4 6766 -56.00 6754 6804 145888
CBOT SOY OIL MAR4 40.42 +0.18 40.09 40.52 2851
NYMEX CRUDE MAR4 103.07 -0.24 102.97 103.50 870
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 = 3.30 Malaysian ringgit)
Dry weather in parts of Malaysia and Indonesia has caused some stress in oil palm trees, traders said, curbing the growth of palm fruit and causing a larger-than-expected drop in output this month.
"It's too dry. Crude palm oil production is most likely down by double digits. The mills are complaining they are not getting enough fresh fruit bunches," said a trader with a foreign commodities brokerage.
Yields could be further hindered in the next few months if there is no relief to the dry spell, the trader added.
By the midday break, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged up 0.7 percent to 2,727 ringgit ($826) per tonne, the upper end of Thursday's trading range and the highest since September 2012.
Total traded volume stood at 13,986 lots of 25 tonnes, slightly above the usual 12,500 lots.
A pick-up in demand also buoyed prices of the tropical oil. Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm oil products in Feb. 1-20 rose 16.9 percent to 875,901 tonnes from a month ago, thanks to bigger shipments to top buyer India.
"I am expecting the market to continue to go up. As long as demand shows improvement, like today's numbers, it will give support to the market," the Kuala Lumpur-based trader added.
Technicals were slightly bearish. Malaysian palm oil is expected to retrace to 2,696 ringgit per tonne, as it has temporarily peaked around a resistance at 2,738 ringgit, said Reuters market analyst Wang Tao.
U.S. soybeans edged higher on Thursday, underpinned by concerns over supplies from top exporter Brazil and a lack of Chinese cancellations of U.S. cargoes.
Smaller supplies of the competing oilseed available for crushing would lift soyoil prices, widening the premium over rival palm oil and potentially channelling demand to the tropical oil instead.
In vegetable oil markets tracked by palm, the U.S. soyoil contract for May rose 0.4 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange slipped 0.8 percent.
In other markets, Brent crude slid towards $110 a barrel on Thursday, dragged down by a survey that pointed to slower growth in China, the world's second largest oil consumer.
Another cargo surveyor Societe Generale de Surveillance will release export figures for the same Feb. 1-20 period later in the day.
Palm, soy and crude oil prices at 0457 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2719 +11.00 2702 2726 222
MY PALM OIL APR4 2735 +19.00 2709 2736 1013
MY PALM OIL MAY4 2727 +19.00 2700 2727 8524
CHINA PALM OLEIN MAY4 6052 -68.00 6024 6092 262586
CHINA SOYOIL MAY4 6766 -56.00 6754 6804 145888
CBOT SOY OIL MAR4 40.42 +0.18 40.09 40.52 2851
NYMEX CRUDE MAR4 103.07 -0.24 102.97 103.50 870
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 = 3.30 Malaysian ringgit)