MARKET DEVELOPMENT
Palm Falls to Over 1-Week Low on Weak Soyoil Markets, Demand Woes
Palm Falls to Over 1-Week Low on Weak Soyoil Markets, Demand Woes
20/05/2014 (Business Recorder) - Malaysian palm oil futures fell to their lowest in more than one week on Monday, following losses in soyoil markets overseas, while concerns that the tropical oil's demand will fizzle out at the end of this month weighed on prices.
By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange was down 0.8 percent at 2,560 ringgit ($796) per tonne, after falling to 2,557 ringgit, the lowest since May 9.
Total traded volume stood at only 7,284 lots of 25 tonnes, below the average 12,500 lots.
"The market is down because of the weak soybean oil prices last Friday," said a trader with a local commodities brokerage in Kuala Lumpur.
"Today prices may test 2,550 ringgit. If 2,550 ringgit breaks, the next target in the following few days is 2,430 ringgit."
Palm typically tracks the comparative vegetable oil as both are common food and fuel substitutes.
The US soyoil contract for July had edged down 0.2 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
Technicals showed that palm oil may break support at 2,554 ringgit per tonne and fall more towards 2,513 ringgit, driven by a wave C, said Reuters market analyst Wang Tao.
Exports of Malaysian palm oil products jumped between 23 percent and 28 percent in the first half of May compared with the same period a month ago, cargo data surveyor showed last week, but market players are uncertain the strong demand can sustain for long.
Consumption of palm oil, used to make a variety of products from foodstuff to soaps and cosmetics, typically climbs ahead of festivals such as the Muslim Ramadan and Eid al-Fitr festivals that starts at end-June.
"The bullishness has already factored in. Now the market talk is that the last 10 days exports might not be as good as the first 1-15 days," the Kuala Lumpur-based trader added.
Export data for May 1-20 will be released by cargo surveyors on Tuesday.
In other markets, Brent crude rose to $110 a barrel on Monday on renewed concerns over Libya's oil output and following some of the worst violence in Tripoli since the 2011 war against Muammar Gaddafi.
By the midday break, the benchmark August contract on the Bursa Malaysia Derivatives Exchange was down 0.8 percent at 2,560 ringgit ($796) per tonne, after falling to 2,557 ringgit, the lowest since May 9.
Total traded volume stood at only 7,284 lots of 25 tonnes, below the average 12,500 lots.
"The market is down because of the weak soybean oil prices last Friday," said a trader with a local commodities brokerage in Kuala Lumpur.
"Today prices may test 2,550 ringgit. If 2,550 ringgit breaks, the next target in the following few days is 2,430 ringgit."
Palm typically tracks the comparative vegetable oil as both are common food and fuel substitutes.
The US soyoil contract for July had edged down 0.2 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
Technicals showed that palm oil may break support at 2,554 ringgit per tonne and fall more towards 2,513 ringgit, driven by a wave C, said Reuters market analyst Wang Tao.
Exports of Malaysian palm oil products jumped between 23 percent and 28 percent in the first half of May compared with the same period a month ago, cargo data surveyor showed last week, but market players are uncertain the strong demand can sustain for long.
Consumption of palm oil, used to make a variety of products from foodstuff to soaps and cosmetics, typically climbs ahead of festivals such as the Muslim Ramadan and Eid al-Fitr festivals that starts at end-June.
"The bullishness has already factored in. Now the market talk is that the last 10 days exports might not be as good as the first 1-15 days," the Kuala Lumpur-based trader added.
Export data for May 1-20 will be released by cargo surveyors on Tuesday.
In other markets, Brent crude rose to $110 a barrel on Monday on renewed concerns over Libya's oil output and following some of the worst violence in Tripoli since the 2011 war against Muammar Gaddafi.
Copyright Reuters, 2014