MARKET DEVELOPMENT
VEGOILS-Palm Falls for 3rd Day, Hits Over 4-Month Low on Ringgit Fears
VEGOILS-Palm Falls for 3rd Day, Hits Over 4-Month Low on Ringgit Fears
21/05/2014 (Reuters) - Malaysian palm oil futures stretched their losing streak into a third day on Tuesday,
hitting their lowest in more than four months as a firm ringgit prompted some investors to liquidate positions, although positive export data checked losses.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell to 2,514 ringgit, a level last touched on Jan. 15, before settling at 2,523 ringgit ($784) per tonne by Tuesday's close, down 0.6 percent.
Total traded volume stood at 38,632 lots of 25 tonnes, above the average 35,000 lots.
"There was talk that the ringgit will strengthen to 3.17. Ahead of that, investors are selling. There could be some fund liquidation," said a trader with a local commodities brokerage.
The Malaysian ringgit was trading at 3.2130 per U.S. dollar late Tuesday, having gained 1.95 percent so far this year. A stronger ringgit makes the palm feedstock more expensive for overseas buyers and refiners.
Technicals showed that palm oil is expected to fall to 2,513 ringgit per tonne, as it has broken a support at 2,554 ringgit, said Reuters market analyst Wang Tao.
Stronger exports in May are expected to outstrip a rise in production and keep stockpiles in check, traders said.
"Looking at the preliminary figures, overall production for Malaysia could be up by 8 percent," the Malaysia-based trader added. "Exports could record a rise between 15-18 percent in May. So the rise in exports will override production this month."
Malaysia, the world's second-largest palm grower, churned out 1.56 million tonnes of palm oil in April, lifting end-stocks to 1.77 million tonnes.
Cargo surveyor Intertek Testing Services showed that exports of Malaysian palm products rose 18.5 percent from the same period a month ago to 856,128 tonnes, thanks to higher demand from India and Europe.
Another cargo surveyor, Societe Generale de Surveillance, showed exports for the same period rose 19.1 percent.
Malaysia's palm oil output is expected to edge up to 19.4 million tonnes this year from 19.22 million tonnes in 2013, the Malaysian Palm Oil Association said, with any damage from a possible El Nino phenomenon likely to be felt only next year.
But a two-month drought earlier this year could mean palm fruit growth would wane at the end of the year, the MPOA warned.
In other markets, Brent oil held steady above $109 a barrel on Tuesday, as unrest and low output in OPEC exporter Libya offset downward pressure from expectations of a weekly build in U.S. crude stocks to a record high.
In competing vegetable oil markets, the U.S. soyoil contract for July had edged down 0.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.4 percent.
Palm, soy and crude oil prices at 1003 GMT
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 = 3.218 Malaysian ringgit)
($1 = 6.2384 Chinese yuan)
hitting their lowest in more than four months as a firm ringgit prompted some investors to liquidate positions, although positive export data checked losses.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell to 2,514 ringgit, a level last touched on Jan. 15, before settling at 2,523 ringgit ($784) per tonne by Tuesday's close, down 0.6 percent.
Total traded volume stood at 38,632 lots of 25 tonnes, above the average 35,000 lots.
"There was talk that the ringgit will strengthen to 3.17. Ahead of that, investors are selling. There could be some fund liquidation," said a trader with a local commodities brokerage.
The Malaysian ringgit was trading at 3.2130 per U.S. dollar late Tuesday, having gained 1.95 percent so far this year. A stronger ringgit makes the palm feedstock more expensive for overseas buyers and refiners.
Technicals showed that palm oil is expected to fall to 2,513 ringgit per tonne, as it has broken a support at 2,554 ringgit, said Reuters market analyst Wang Tao.
Stronger exports in May are expected to outstrip a rise in production and keep stockpiles in check, traders said.
"Looking at the preliminary figures, overall production for Malaysia could be up by 8 percent," the Malaysia-based trader added. "Exports could record a rise between 15-18 percent in May. So the rise in exports will override production this month."
Malaysia, the world's second-largest palm grower, churned out 1.56 million tonnes of palm oil in April, lifting end-stocks to 1.77 million tonnes.
Cargo surveyor Intertek Testing Services showed that exports of Malaysian palm products rose 18.5 percent from the same period a month ago to 856,128 tonnes, thanks to higher demand from India and Europe.
Another cargo surveyor, Societe Generale de Surveillance, showed exports for the same period rose 19.1 percent.
Malaysia's palm oil output is expected to edge up to 19.4 million tonnes this year from 19.22 million tonnes in 2013, the Malaysian Palm Oil Association said, with any damage from a possible El Nino phenomenon likely to be felt only next year.
But a two-month drought earlier this year could mean palm fruit growth would wane at the end of the year, the MPOA warned.
In other markets, Brent oil held steady above $109 a barrel on Tuesday, as unrest and low output in OPEC exporter Libya offset downward pressure from expectations of a weekly build in U.S. crude stocks to a record high.
In competing vegetable oil markets, the U.S. soyoil contract for July had edged down 0.3 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.4 percent.
Palm, soy and crude oil prices at 1003 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2546 -13.00 2529 2562 493
MY PALM OIL JUL4 2518 -18.00 2506 2537 6166
MY PALM OIL AUG4 2505 -19.00 2492 2525 19087
CHINA PALM OLEIN SEP4 5878 -46.00 5854 5904 306720
CHINA SOYOIL SEP4 6726 -54.00 6722 6756 262548
CBOT SOY OIL JUL4 40.03 -0.04 40.01 40.19 3424
NYMEX CRUDE JUL4 103.14 +0.81 102.78 103.25 21155
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 = 3.218 Malaysian ringgit)
($1 = 6.2384 Chinese yuan)