MARKET DEVELOPMENT
VEGOILS-Palm Slips to Near 3-month Low, Tracking Rival Vegetable Oils
VEGOILS-Palm Slips to Near 3-month Low, Tracking Rival Vegetable Oils
02/05/2014 (Reuters) - Malaysian palm oil futures dipped to a near three-month low on Friday, tracking declines in comparative vegetable oils, with traders expecting prices to pick up later this month on high seasonal demand.
The benchmark July contract on the Bursa Malaysia Derivatives Exchange fell to 2,558 ringgit ($780), the lowest since Feb. 6, in early Friday trade, before closing at 2,591 ringgit per tonne, down 1.2 percent.
Total traded volumes stood at 41,379 lots of 25 tonnes, above the average 35,000 lots.
"Prices are down on the back of a sharp fall in soybean oil," a Kuala Lumpur-based trader said. "That is the main reason why the market is down."
The U.S. soyoil contract for July added 1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange was nearly flat.
U.S. soybean futures fell 3.4 percent on Thursday, their biggest daily decline since Sept. 16, as investors locked in profits after a five-day rally pushed prices to a 9-1/2 month high.
Palm typically tracks the rival commodity as both vegetable oils are common food and fuel substitutes.
Despite lower palm prices, the Muslim holy month of Ramadan will begin in late June, followed by the Eid al-Fitr celebrations in July, and this is expected to help boost palm oil demand next month.
"We are approaching the (high) demand season ... Exports will definitely pick up in May," said the trader. The focus was also shifting towards the release of Malaysian May 1-10 palm oil export data between May 10-12, the trader added.
"It is definitely the sharp overnight losses in CBOT that has dragged us down," added a second palm trader, who was neutral on palm price expectations. "Prices in May will trade in a range between 2,520 and 2,630 ringgit."
In related news, exports in Indonesia unexpectedly rose in March, bolstered by stronger palm oil shipments.
Earlier this week, Indonesia's industry ministry said it was considering changes to the country's palm oil export tax system, as the top producer and exporter of the edible oil looks to further promote downstream industries.
In other markets, brent crude futures rose by almost $1 to above $108 a barrel as fighting between Ukraine's army and a pro-Russian group in the east intensified, stoking fears of energy supply disruptions from the region.
Palm, soy and crude oil prices at 1013 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2660 -31.00 2635 2660 51
MY PALM OIL JUN4 2614 -26.00 2579 2617 2757
MY PALM OIL JUL4 2591 -32.00 2558 2594 21273
CHINA PALM OLEIN SEP4 6130 -24.00 6118 6170 315216
CHINA SOYOIL SEP4 6990 -2.00 6978 7008 283078
CBOT SOY OIL JUL4 41.58 +0.41 40.87 41.63 8234
NYMEX CRUDE JUN4 99.90 +0.48 99.17 100.09 20105
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 = 6.2593 Chinese Yuan) ($1 = 3.2655 Malaysian Ringgits)
The benchmark July contract on the Bursa Malaysia Derivatives Exchange fell to 2,558 ringgit ($780), the lowest since Feb. 6, in early Friday trade, before closing at 2,591 ringgit per tonne, down 1.2 percent.
Total traded volumes stood at 41,379 lots of 25 tonnes, above the average 35,000 lots.
"Prices are down on the back of a sharp fall in soybean oil," a Kuala Lumpur-based trader said. "That is the main reason why the market is down."
The U.S. soyoil contract for July added 1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange was nearly flat.
U.S. soybean futures fell 3.4 percent on Thursday, their biggest daily decline since Sept. 16, as investors locked in profits after a five-day rally pushed prices to a 9-1/2 month high.
Palm typically tracks the rival commodity as both vegetable oils are common food and fuel substitutes.
Despite lower palm prices, the Muslim holy month of Ramadan will begin in late June, followed by the Eid al-Fitr celebrations in July, and this is expected to help boost palm oil demand next month.
"We are approaching the (high) demand season ... Exports will definitely pick up in May," said the trader. The focus was also shifting towards the release of Malaysian May 1-10 palm oil export data between May 10-12, the trader added.
"It is definitely the sharp overnight losses in CBOT that has dragged us down," added a second palm trader, who was neutral on palm price expectations. "Prices in May will trade in a range between 2,520 and 2,630 ringgit."
In related news, exports in Indonesia unexpectedly rose in March, bolstered by stronger palm oil shipments.
Earlier this week, Indonesia's industry ministry said it was considering changes to the country's palm oil export tax system, as the top producer and exporter of the edible oil looks to further promote downstream industries.
In other markets, brent crude futures rose by almost $1 to above $108 a barrel as fighting between Ukraine's army and a pro-Russian group in the east intensified, stoking fears of energy supply disruptions from the region.
Palm, soy and crude oil prices at 1013 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2660 -31.00 2635 2660 51
MY PALM OIL JUN4 2614 -26.00 2579 2617 2757
MY PALM OIL JUL4 2591 -32.00 2558 2594 21273
CHINA PALM OLEIN SEP4 6130 -24.00 6118 6170 315216
CHINA SOYOIL SEP4 6990 -2.00 6978 7008 283078
CBOT SOY OIL JUL4 41.58 +0.41 40.87 41.63 8234
NYMEX CRUDE JUN4 99.90 +0.48 99.17 100.09 20105
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 = 6.2593 Chinese Yuan) ($1 = 3.2655 Malaysian Ringgits)