MARKET DEVELOPMENT
VEGOILS-Palm Oil Hits 3-Week High on China Economic Data
VEGOILS-Palm Oil Hits 3-Week High on China Economic Data
17/04/2014 (Reuters) - Malaysian palm oil futures extended gains to hit their highest in three weeks on Wednesday after better-than-expected economic data from China soothed fears about slowing demand from the world's second-largest consumer of the tropical oil.
China's economy grew an annual 7.4 percent in the first quarter, slower than the 7.7 percent pace in the previous three months but ahead of market expectations of 7.3 percent.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange hit an intraday high of 2,691 ringgit a tonne, its highest since March 27, before standing at 2,685 ringgit ($828) by Wednesday's close, up 1.4 percent.
"The data offers some comfort to investors who have been worrying over Chinese economic slowdown. Going forward, I think the concern is whether prices will able to hold above 2,650 ringgit in a sustainable fashion," said Phillip Futures analyst Tan Chee Tat.
"It hasn't been able to make a convincing breakthrough."
Technicals showed that Malaysian palm oil may extend its gain to 2,703 ringgit per tonne as it has cleared a resistance at 2,653 ringgit, said Reuters market analyst Wang Tao.
But Malaysian palm oil futures, which set the tone for global prices, have gained on strong exports in the first half of April, with the possible return of the dreaded El Nino weather phenomenon offering additional support.
A majority of weather forecasting models indicate that an El Nino weather phenomenon may develop around the middle of the year, but it is too early to assess its likely strength, the U.N. World Meteorological Organization said on Tuesday.
El Nino, characterised by unusually warm surface temperatures in the central and eastern tropical Pacific Ocean, has a significant impact on climate in many parts of the world and a warming influence on global temperatures, the WMO said.
"The immediate impact will be a sharp decline in production," said Tan at Phillip Futures, referring to palm oil output.
"Long-term wise, the drought will weaken tree structure and affect output in coming years. It will affect supply and contribute to the upside trend in palm oil prices."
In competing vegetable oil markets, the U.S. soyoil contract for May rose 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange added nearly 1 percent.
In other markets, global oil price rose to $110 a barrel on Wednesday, shaking off slower economic growth figures in China, as tensions mounted in Ukraine.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2735 +43.00 2703 2737 346
MY PALM OIL JUN4 2702 +39.00 2670 2705 11598
MY PALM OIL JUL4 2685 +38.00 2655 2691 18744
CHINA PALM OLEIN SEP4 6212 +116.00 6114 6214 541596
CHINA SOYOIL SEP4 7032 +68.00 6962 7034 621422
CBOT SOY OIL MAY4 43.17 +0.34 42.54 43.22 5656
NYMEX CRUDE MAY4 104.70 +0.95 103.68 104.82 18558
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 = 3.241 ringgit)
($1 = 6.2214 Chinese yuan)
China's economy grew an annual 7.4 percent in the first quarter, slower than the 7.7 percent pace in the previous three months but ahead of market expectations of 7.3 percent.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange hit an intraday high of 2,691 ringgit a tonne, its highest since March 27, before standing at 2,685 ringgit ($828) by Wednesday's close, up 1.4 percent.
"The data offers some comfort to investors who have been worrying over Chinese economic slowdown. Going forward, I think the concern is whether prices will able to hold above 2,650 ringgit in a sustainable fashion," said Phillip Futures analyst Tan Chee Tat.
"It hasn't been able to make a convincing breakthrough."
Technicals showed that Malaysian palm oil may extend its gain to 2,703 ringgit per tonne as it has cleared a resistance at 2,653 ringgit, said Reuters market analyst Wang Tao.
But Malaysian palm oil futures, which set the tone for global prices, have gained on strong exports in the first half of April, with the possible return of the dreaded El Nino weather phenomenon offering additional support.
A majority of weather forecasting models indicate that an El Nino weather phenomenon may develop around the middle of the year, but it is too early to assess its likely strength, the U.N. World Meteorological Organization said on Tuesday.
El Nino, characterised by unusually warm surface temperatures in the central and eastern tropical Pacific Ocean, has a significant impact on climate in many parts of the world and a warming influence on global temperatures, the WMO said.
"The immediate impact will be a sharp decline in production," said Tan at Phillip Futures, referring to palm oil output.
"Long-term wise, the drought will weaken tree structure and affect output in coming years. It will affect supply and contribute to the upside trend in palm oil prices."
In competing vegetable oil markets, the U.S. soyoil contract for May rose 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange added nearly 1 percent.
In other markets, global oil price rose to $110 a barrel on Wednesday, shaking off slower economic growth figures in China, as tensions mounted in Ukraine.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2735 +43.00 2703 2737 346
MY PALM OIL JUN4 2702 +39.00 2670 2705 11598
MY PALM OIL JUL4 2685 +38.00 2655 2691 18744
CHINA PALM OLEIN SEP4 6212 +116.00 6114 6214 541596
CHINA SOYOIL SEP4 7032 +68.00 6962 7034 621422
CBOT SOY OIL MAY4 43.17 +0.34 42.54 43.22 5656
NYMEX CRUDE MAY4 104.70 +0.95 103.68 104.82 18558
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 = 3.241 ringgit)
($1 = 6.2214 Chinese yuan)