MARKET DEVELOPMENT
VEGOILS-Palm Snaps 4-day Losing Streak on Firm Crude, Technical Rebound
VEGOILS-Palm Snaps 4-day Losing Streak on Firm Crude, Technical Rebound
23/05/2014 (Reuters) - Malaysian palm oil futures ended higher on Thursday to snap a four-day losing streak, lifted by firm crude prices and a recovery in soyoil markets overseas, while a rebound in technicals underpinned sentiment.
Prices slipped off a 2,630 ringgit top last Thursday to fall more than 5 percent this week, touching their lowest in over four months, after weak Chinese edible oil markets and a strong ringgit triggered a round of technical selling.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had edged up 0.7 percent to 2,522 ringgit ($783) per tonne by Thursday's close, its first rise in five sessions.
Total traded volume stood at 28,562 lots of 25 tonnes, below the average 35,000 lots.
"Prices are up today to correct itself from the short-term oversold situation, and because of firmer crude oil prices," said a trader with a local commodities brokerage in Kuala Lumpur.
"Crude oil has been supportive over the last two weeks.
That's why there was good buying at 2,510 ringgit," the trader added.
Brent crude oil steadied near a 2-1/2-month high above $110 a barrel on Thursday, supported by better-than-expected data on China's manufacturing industry and a large draw in U.S. crude oil stocks.
Higher crude oil prices could turn investors to palm oil which is seen as a "greener" alternative for biodiesel feedstock.
Technicals showed palm oil is expected to rebound to 2,545 ringgit per tonne as it has broken above resistance at 2,525 ringgit, said Reuters market analyst Wang Tao.
In other competing vegetable oil markets, the U.S. soyoil contract for July edged up 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange inched up 1 percent.
Palm oil typically tracks soyoil markets as both edible oils are common food and fuel substitutes.
Strength in the Malaysian ringgit, however, put a lid on gains in the palm market.
The ringgit hit its strongest in more than six months on Thursday to trade at 3.2040 per dollar, squeezing
margins for overseas investors buying the ringgit-priced feedstock.
"Any gains will be limited at 2,550 ringgit, and the lower side of 2,450-2,430 ringgit will be tested in the next few days," the trader added.
Palm, soy and crude oil prices at 1014 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 = 3.207 Malaysian ringgit)
($1 = 6.2343 Chinese yuan)
Prices slipped off a 2,630 ringgit top last Thursday to fall more than 5 percent this week, touching their lowest in over four months, after weak Chinese edible oil markets and a strong ringgit triggered a round of technical selling.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had edged up 0.7 percent to 2,522 ringgit ($783) per tonne by Thursday's close, its first rise in five sessions.
Total traded volume stood at 28,562 lots of 25 tonnes, below the average 35,000 lots.
"Prices are up today to correct itself from the short-term oversold situation, and because of firmer crude oil prices," said a trader with a local commodities brokerage in Kuala Lumpur.
"Crude oil has been supportive over the last two weeks.
That's why there was good buying at 2,510 ringgit," the trader added.
Brent crude oil steadied near a 2-1/2-month high above $110 a barrel on Thursday, supported by better-than-expected data on China's manufacturing industry and a large draw in U.S. crude oil stocks.
Higher crude oil prices could turn investors to palm oil which is seen as a "greener" alternative for biodiesel feedstock.
Technicals showed palm oil is expected to rebound to 2,545 ringgit per tonne as it has broken above resistance at 2,525 ringgit, said Reuters market analyst Wang Tao.
In other competing vegetable oil markets, the U.S. soyoil contract for July edged up 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange inched up 1 percent.
Palm oil typically tracks soyoil markets as both edible oils are common food and fuel substitutes.
Strength in the Malaysian ringgit, however, put a lid on gains in the palm market.
The ringgit hit its strongest in more than six months on Thursday to trade at 3.2040 per dollar, squeezing
margins for overseas investors buying the ringgit-priced feedstock.
"Any gains will be limited at 2,550 ringgit, and the lower side of 2,450-2,430 ringgit will be tested in the next few days," the trader added.
Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 2550 +8.00 2527 2562 225
MY PALM OIL JUL4 2533 +15.00 2510 2542 4010
MY PALM OIL AUG4 2522 +17.00 2499 2531 15856
CHINA PALM OLEIN SEP4 5922 +48.00 5902 5950 274058
CHINA SOYOIL SEP4 6806 +72.00 6762 6824 329434
CBOT SOY OIL JUL4 40.82 +0.35 40.36 40.83 5682
NYMEX CRUDE JUL4 104.01 -0.06 103.67 104.11 13398
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 = 3.207 Malaysian ringgit)
($1 = 6.2343 Chinese yuan)