MARKET DEVELOPMENT
VEGOILS-Palm Falls on Profit-taking, But Posts Biggest Weekly Gain in Seven
VEGOILS-Palm Falls on Profit-taking, But Posts Biggest Weekly Gain in Seven
19/04/2014 (Reuters) - Malaysian palm oil futures edged lower in thin trade on Friday, as investors continued to book profits from big gains earlier this week, with weakness in overseas soy markets and a firm ringgit also dragging.
Benchmark prices however notched a 0.8 percent gain this week, their biggest rise since early March, lifted by anticipation of a recovery in food and fuel demand for the tropical oil.
"Today there's a continuation of yesterday's profit-taking but without any serious volume involved," said a trader with a foreign commodities brokerage.
"Given that the external market is weakening and our ringgit is strengthening slightly, most likely the palm market will continue its correction to test 2,600 ringgit."
By Friday's close, the benchmark July contract on the Bursa Malaysia Derivatives Exchange had edged down 0.5 percent to 2,635 ringgit ($814) per tonne, with prices locked between 2,623-2,653 ringgit.
Total traded volumes were thin at 18,509 lots of 25 tonnes, about half the average 35,000 lots.
Most currency and equity markets are closed for the Good Friday holiday and will reopen for trading next week.
Market players are watching for Malaysian export data for the April 1-20 period, which will be released by cargo surveyors on Monday, to gauge global demand for the tropical oil.
Palm oil demand is expected to strengthen in April onwards as buyers in India, Pakistan and the Middle East restock ahead of the Muslim holy month of Ramadan in late June, followed by the Eid al-Fitr celebrations in July.
"Demand will be reflected by the export figures next Monday. From this period onwards exports should pick up, given that March exports were so weak and also because of Ramadan demand," the trader added.
A strong Malaysian ringgit, however, could cap export sales as it makes the ringgit-denominated feedstock more expensive for overseas buyers. The ringgit was trading at 3.2390 against the U.S. dollar late Friday.
Malaysia's overseas sales of palm oil products fell 8 percent to 1.24 million tonnes in March compared to a month ago, missing market estimates for 1.30 million tonnes of shipments.
Talks of Chinese commodity buyers defaulting on soybean cargoes also kept traders wary that the world's second-largest edible oil buyer would also slow purchases of other vegetable oils.
China's top soy buyer Shandong Sunrise Group told Reuters that Chinese buyers may default on a further 1.2 million tonnes of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market.
The most active September soybean oil contract on the Dalian Commodities Exchange fell 0.5 percent in late Asian trade.
Palm, soy and crude oil prices at 1006 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2690 -22.00 2685 2714 271
MY PALM OIL JUN4 2650 -11.00 2635 2665 3667
MY PALM OIL JUL4 2635 -12.00 2623 2653 11203
CHINA PALM OLEIN SEP4 6190 -54.00 6164 6208 322750
CHINA SOYOIL SEP4 7038 -34.00 7008 7058 365526
CBOT SOY OIL JUL4 43.59 -0.34 43.44 43.94 50892
NYMEX CRUDE MAY4 104.30 +0.54 103.54 104.78 179888
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 = 3.239 Malaysian ringgit)
($1 = 6.2242 Chinese yuan)
Benchmark prices however notched a 0.8 percent gain this week, their biggest rise since early March, lifted by anticipation of a recovery in food and fuel demand for the tropical oil.
"Today there's a continuation of yesterday's profit-taking but without any serious volume involved," said a trader with a foreign commodities brokerage.
"Given that the external market is weakening and our ringgit is strengthening slightly, most likely the palm market will continue its correction to test 2,600 ringgit."
By Friday's close, the benchmark July contract on the Bursa Malaysia Derivatives Exchange had edged down 0.5 percent to 2,635 ringgit ($814) per tonne, with prices locked between 2,623-2,653 ringgit.
Total traded volumes were thin at 18,509 lots of 25 tonnes, about half the average 35,000 lots.
Most currency and equity markets are closed for the Good Friday holiday and will reopen for trading next week.
Market players are watching for Malaysian export data for the April 1-20 period, which will be released by cargo surveyors on Monday, to gauge global demand for the tropical oil.
Palm oil demand is expected to strengthen in April onwards as buyers in India, Pakistan and the Middle East restock ahead of the Muslim holy month of Ramadan in late June, followed by the Eid al-Fitr celebrations in July.
"Demand will be reflected by the export figures next Monday. From this period onwards exports should pick up, given that March exports were so weak and also because of Ramadan demand," the trader added.
A strong Malaysian ringgit, however, could cap export sales as it makes the ringgit-denominated feedstock more expensive for overseas buyers. The ringgit was trading at 3.2390 against the U.S. dollar late Friday.
Malaysia's overseas sales of palm oil products fell 8 percent to 1.24 million tonnes in March compared to a month ago, missing market estimates for 1.30 million tonnes of shipments.
Talks of Chinese commodity buyers defaulting on soybean cargoes also kept traders wary that the world's second-largest edible oil buyer would also slow purchases of other vegetable oils.
China's top soy buyer Shandong Sunrise Group told Reuters that Chinese buyers may default on a further 1.2 million tonnes of soybeans worth about $900 million being shipped from the United States and South America, to avoid incurring huge losses in a depressed local market.
The most active September soybean oil contract on the Dalian Commodities Exchange fell 0.5 percent in late Asian trade.
Palm, soy and crude oil prices at 1006 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2690 -22.00 2685 2714 271
MY PALM OIL JUN4 2650 -11.00 2635 2665 3667
MY PALM OIL JUL4 2635 -12.00 2623 2653 11203
CHINA PALM OLEIN SEP4 6190 -54.00 6164 6208 322750
CHINA SOYOIL SEP4 7038 -34.00 7008 7058 365526
CBOT SOY OIL JUL4 43.59 -0.34 43.44 43.94 50892
NYMEX CRUDE MAY4 104.30 +0.54 103.54 104.78 179888
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 = 3.239 Malaysian ringgit)
($1 = 6.2242 Chinese yuan)