MARKET DEVELOPMENT
VEGOILS-Palm Oil Ends Flat, Remains Near 17-month Highs on Weather Worries
VEGOILS-Palm Oil Ends Flat, Remains Near 17-month Highs on Weather Worries
05/03/2014 (Reuters) - Malaysian palm oil futures ended flat on Tuesday, trading near 17-month highs as lower production expectations due to dry weather conditions were offset by weaker comparative vegetable oils.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange ended flat at 2,805 ringgit ($850) per tonne. On Monday, prices hit 2,860 ringgit, their highest since Sept. 20, 2012.
"The market seems to be holding quite well above 2,800," a trader with a foreign commodities brokerage said. "The underlying fundamental is still holding firm - the weather worries."
Biodiesel demand in top palm producer Indonesia was also aiding benchmark prices, said the trader.
Concerns over dry weather tightening palm supplies in dominant Southeast Asian producers Indonesia and Malaysia have helped palm prices gain around 5 percent this year.
"Most of Indonesia will have longer and drier dry season this year," said Andi Eka Sakya, head of Indonesia's meteorology climatology and geophysics agency, mainly due to an El Nino weather pattern occurring after June.
Market participants are keeping watch for price outlooks from key industry speakers at an industry conference in Kuala Lumpur that runs from March 3-5.
Palm oil imports in China, a major buyer of the vegetable oil, are likely to take a hit in coming months as stockpiles at major ports have risen to near record highs of around 1.2 million tonnes on weak domestic demand, traders told Reuters on the conference sidelines.
The U.S. soyoil contract for May fell 0.5 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange was unchanged.
"We are still bullish on CPO (crude palm oil) prices as we expect sustained inventory downtrend through 1Q14 to hit 1.67 million metric tonnes by end-March," Kenanga Investment Bank analyst Alan Lim Seong Chun said in a note.
"We believe CPO (crude palm oil) prices are supported indirectly by concerns over the Ukraine crisis and the deteriorating outlook for Brazilian soybean production."
In technicals, Malaysian palm oil is expected to peak around a resistance at 2,883 ringgit per tonne and start a deep correction thereafter, said Reuters market analyst Wang Tao.
United Plantations Bhd said palm oil prices could rise above 3,000 ringgit ($910) a tonne this year, up more than 6 percent from current levels, if dry weather continues in Southeast Asia, the firm's chief executive said.
Total traded volume on Tuesday stood at 31,731 lots of 25 tonnes, slightly less than the average of 35,000 lots.
In other markets, oil fell more than $1 to below $110 a barrel after President Vladimir Putin recalled troops to base from military exercises in western Russia near its borders with Ukraine.
Higher crude oil prices would increase demand for palm oil as an alternative feedstock to produce biofuels.
Palm, soy and crude oil prices at 1009 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2790 -31.00 2790 2800 54
MY PALM OIL APR4 2800 -12.00 2788 2832 1451
MY PALM OIL MAY4 2805 -1.00 2788 2829 18315
CHINA PALM OLEIN MAY4 6132 -36.00 6128 6192 137732
CHINA SOYOIL MAY4 6848 +2.00 6840 6898 132672
CBOT SOY OIL MAY4 42.17 -0.21 42.04 42.61 4920
NYMEX CRUDE APR4 103.82 -1.10 103.60 104.96 24714
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 = 3.2825 Malaysian ringgit)
The benchmark May contract on the Bursa Malaysia Derivatives Exchange ended flat at 2,805 ringgit ($850) per tonne. On Monday, prices hit 2,860 ringgit, their highest since Sept. 20, 2012.
"The market seems to be holding quite well above 2,800," a trader with a foreign commodities brokerage said. "The underlying fundamental is still holding firm - the weather worries."
Biodiesel demand in top palm producer Indonesia was also aiding benchmark prices, said the trader.
Concerns over dry weather tightening palm supplies in dominant Southeast Asian producers Indonesia and Malaysia have helped palm prices gain around 5 percent this year.
"Most of Indonesia will have longer and drier dry season this year," said Andi Eka Sakya, head of Indonesia's meteorology climatology and geophysics agency, mainly due to an El Nino weather pattern occurring after June.
Market participants are keeping watch for price outlooks from key industry speakers at an industry conference in Kuala Lumpur that runs from March 3-5.
Palm oil imports in China, a major buyer of the vegetable oil, are likely to take a hit in coming months as stockpiles at major ports have risen to near record highs of around 1.2 million tonnes on weak domestic demand, traders told Reuters on the conference sidelines.
The U.S. soyoil contract for May fell 0.5 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange was unchanged.
"We are still bullish on CPO (crude palm oil) prices as we expect sustained inventory downtrend through 1Q14 to hit 1.67 million metric tonnes by end-March," Kenanga Investment Bank analyst Alan Lim Seong Chun said in a note.
"We believe CPO (crude palm oil) prices are supported indirectly by concerns over the Ukraine crisis and the deteriorating outlook for Brazilian soybean production."
In technicals, Malaysian palm oil is expected to peak around a resistance at 2,883 ringgit per tonne and start a deep correction thereafter, said Reuters market analyst Wang Tao.
United Plantations Bhd said palm oil prices could rise above 3,000 ringgit ($910) a tonne this year, up more than 6 percent from current levels, if dry weather continues in Southeast Asia, the firm's chief executive said.
Total traded volume on Tuesday stood at 31,731 lots of 25 tonnes, slightly less than the average of 35,000 lots.
In other markets, oil fell more than $1 to below $110 a barrel after President Vladimir Putin recalled troops to base from military exercises in western Russia near its borders with Ukraine.
Higher crude oil prices would increase demand for palm oil as an alternative feedstock to produce biofuels.
Palm, soy and crude oil prices at 1009 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2790 -31.00 2790 2800 54
MY PALM OIL APR4 2800 -12.00 2788 2832 1451
MY PALM OIL MAY4 2805 -1.00 2788 2829 18315
CHINA PALM OLEIN MAY4 6132 -36.00 6128 6192 137732
CHINA SOYOIL MAY4 6848 +2.00 6840 6898 132672
CBOT SOY OIL MAY4 42.17 -0.21 42.04 42.61 4920
NYMEX CRUDE APR4 103.82 -1.10 103.60 104.96 24714
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 = 3.2825 Malaysian ringgit)