MARKET DEVELOPMENT
VEGOILS-Palm Hits 17-Month High; Dry Weather, Overseas Soy Markets Support
VEGOILS-Palm Hits 17-Month High; Dry Weather, Overseas Soy Markets Support
07/03/2014 (Reuters) - Malaysian palm oil futures rallied to end at a 17-month high on Thursday, following a recovery in China and U.S. soy markets, while unfavourable crop weather in Southeast Asia continued to underpin prices.
The U.S. soyoil contract for May rose 0.4 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange gained 0.6 percent. Higher prices of soyoil could prevent buyers from switching to the rival vegetable oil.
"The whole scenario changed after the midday break on the back of the recovery of the Dalian and the U.S. soybean oil," a trader with a foreign commodities brokerage said.
"There was huge buying interest which came in after 5.00 pm. Those who held on to a selling-position earlier had to trim their positions," the Kuala Lumpur-based trader said.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange climbed to 2,869 ringgit per tonne in late Thursday trade, hitting its highest since Sept. 2012. Prices then moved to close at 2,863 ringgit ($878), a 1.2 percent increase from the previous session.
The Malaysian palm oil markets which set the tone for global prices, are on track for a fifth straight week of gains.
Total traded volume stood at 33,033 lots of 25 tonnes, slightly below the average 35,000 lots.
Technicals show that Malaysian palm oil prices could peak around a resistance at 2,883 ringgit per tonne, Reuters market analyst Wang Tao said.
The next three weeks will be crucial for palm oil output, traders and analysts at a key industry conference in Kuala Lumpur said. If dryness continues at oil palm plantations in top producers Indonesia and Malaysia, it would reduce yields of fresh fruit bunches and drive up prices.
Malaysian palm oil stocks likely dropped to a five-month low of 1.79 million tonnes in February as dry weather hurt output, a Reuters poll showed, but lacklustre demand towards the end of the month curbed the fall in inventories.
Fears of a prolonged dry spell tightening palm supplies have boosted prices nearly 8 percent so far this year, although some market players said the recent rally could be a little overdone.
Analysts said at such high prices, demand for the tropical oil could dwindle as buyers switch to rival edible oils of which there is ample supply, such as sunflower, soy and canola oils.
In other markets, Brent crude held steady just below $108 a barrel on Thursday, as investors looked for direction after geopolitical risk over the crisis in Ukraine appeared to ease and U.S. data suggesting weaker oil demand prompted a heavy sell-off over the past two days.
Palm, soy and crude oil prices at 1041 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2865 +34.00 2814 2865 62
MY PALM OIL APR4 2865 +34.00 2810 2869 1083
MY PALM OIL MAY4 2863 +33.00 2808 2869 19479
CHINA PALM OLEIN MAY4 6242 +28.00 6180 6244 130088
CHINA SOYOIL MAY4 6998 +40.00 6938 7000 107050
CBOT SOY OIL MAY4 43.66 +0.26 43.12 43.69 4793
NYMEX CRUDE APR4 101.30 -0.15 100.86 101.43 16945
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 = 3.26 Malaysian ringgit)
($1 = 6.1185 Chinese yuan)
The U.S. soyoil contract for May rose 0.4 percent in late Asian trade, while the most active May soybean oil contract on the Dalian Commodities Exchange gained 0.6 percent. Higher prices of soyoil could prevent buyers from switching to the rival vegetable oil.
"The whole scenario changed after the midday break on the back of the recovery of the Dalian and the U.S. soybean oil," a trader with a foreign commodities brokerage said.
"There was huge buying interest which came in after 5.00 pm. Those who held on to a selling-position earlier had to trim their positions," the Kuala Lumpur-based trader said.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange climbed to 2,869 ringgit per tonne in late Thursday trade, hitting its highest since Sept. 2012. Prices then moved to close at 2,863 ringgit ($878), a 1.2 percent increase from the previous session.
The Malaysian palm oil markets which set the tone for global prices, are on track for a fifth straight week of gains.
Total traded volume stood at 33,033 lots of 25 tonnes, slightly below the average 35,000 lots.
Technicals show that Malaysian palm oil prices could peak around a resistance at 2,883 ringgit per tonne, Reuters market analyst Wang Tao said.
The next three weeks will be crucial for palm oil output, traders and analysts at a key industry conference in Kuala Lumpur said. If dryness continues at oil palm plantations in top producers Indonesia and Malaysia, it would reduce yields of fresh fruit bunches and drive up prices.
Malaysian palm oil stocks likely dropped to a five-month low of 1.79 million tonnes in February as dry weather hurt output, a Reuters poll showed, but lacklustre demand towards the end of the month curbed the fall in inventories.
Fears of a prolonged dry spell tightening palm supplies have boosted prices nearly 8 percent so far this year, although some market players said the recent rally could be a little overdone.
Analysts said at such high prices, demand for the tropical oil could dwindle as buyers switch to rival edible oils of which there is ample supply, such as sunflower, soy and canola oils.
In other markets, Brent crude held steady just below $108 a barrel on Thursday, as investors looked for direction after geopolitical risk over the crisis in Ukraine appeared to ease and U.S. data suggesting weaker oil demand prompted a heavy sell-off over the past two days.
Palm, soy and crude oil prices at 1041 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR4 2865 +34.00 2814 2865 62
MY PALM OIL APR4 2865 +34.00 2810 2869 1083
MY PALM OIL MAY4 2863 +33.00 2808 2869 19479
CHINA PALM OLEIN MAY4 6242 +28.00 6180 6244 130088
CHINA SOYOIL MAY4 6998 +40.00 6938 7000 107050
CBOT SOY OIL MAY4 43.66 +0.26 43.12 43.69 4793
NYMEX CRUDE APR4 101.30 -0.15 100.86 101.43 16945
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 = 3.26 Malaysian ringgit)
($1 = 6.1185 Chinese yuan)