MARKET DEVELOPMENT
VEGOILS-Palm Oil Snaps Three-week Decline as Crude Hits 9-month High
VEGOILS-Palm Oil Snaps Three-week Decline as Crude Hits 9-month High
14/06/2014 (Reuters) - Palm oil strengthened in Malaysia on Friday snapping three weeks of declines, buoyed by firmer crude oil prices, buyers stocking up ahead of the Muslim fasting month and a week of extreme heat that suggested an El Nino weather pattern may be on the way.
By Friday's close, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had climbed 1.08 percent to 2,427 ringgit ($750) per tonne, the benchmark's biggest single-day percentage gain since Feb. 26.
The contract rebounded from near eight-month lows, rising 0.53 percent this week after three straight weeks of declines.
Total traded volume stood at 42,111 lots of 25 tonnes, above the average 35,000 lots.
"You must bear in mind crude oil is bidding on the high side," said a trader with foreign commodities brokerage in Kuala Lumpur. Higher crude prices make palm a more attractive feedstock to produce biodiesel.
Brent crude climbed to a nine-month high near $114 a barrel on Friday, as supply disruption fears took centre stage after the United States threatened military action in Iraq.
Palm oil prices also benefited from an expected increase in demand during the fasting month, at a time when plantation workers will take holidays, potentially delaying harvests and disrupting supply in July.
Traders also said that after the past five days of extreme heat in peninsular Malaysia there was a feeling that this could be the onset of El Nino, further disrupting output.
"It's scorching," said another trader at a local commodities brokerage in Malaysia.
Technicals showed palm oil is expected to test a resistance at 2,437 ringgit per tonne, a break above which will lead to a further gain to 2,487 ringgit, said Reuters market analyst Wang Tao.
In other competing vegetable oil markets, the U.S. soyoil contract for July edged up 0.93 percent, in late Asian trading, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.5 percent. Palm, soy and crude oil prices at 1021 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 0 +0.00 0 0 0
MY PALM OIL JUL4 2433 +24.00 2409 2452 1273
MY PALM OIL AUG4 2427 +26.00 2403 2448 18502
CHINA PALM OLEIN SEP4 5816 +58.00 5780 5826 213400
CHINA SOYOIL SEP4 6680 +34.00 6664 6696 146968
CBOT SOY OIL JUL4 38.96 +0.38 38.59 39.05 5549
NYMEX CRUDE JUL4 107.04 +0.51 106.70 107.68 37537
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 = 3.2120 Ringgit) ($1 = 6.2057 Chinese Yuan)
By Friday's close, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had climbed 1.08 percent to 2,427 ringgit ($750) per tonne, the benchmark's biggest single-day percentage gain since Feb. 26.
The contract rebounded from near eight-month lows, rising 0.53 percent this week after three straight weeks of declines.
Total traded volume stood at 42,111 lots of 25 tonnes, above the average 35,000 lots.
"You must bear in mind crude oil is bidding on the high side," said a trader with foreign commodities brokerage in Kuala Lumpur. Higher crude prices make palm a more attractive feedstock to produce biodiesel.
Brent crude climbed to a nine-month high near $114 a barrel on Friday, as supply disruption fears took centre stage after the United States threatened military action in Iraq.
Palm oil prices also benefited from an expected increase in demand during the fasting month, at a time when plantation workers will take holidays, potentially delaying harvests and disrupting supply in July.
Traders also said that after the past five days of extreme heat in peninsular Malaysia there was a feeling that this could be the onset of El Nino, further disrupting output.
"It's scorching," said another trader at a local commodities brokerage in Malaysia.
Technicals showed palm oil is expected to test a resistance at 2,437 ringgit per tonne, a break above which will lead to a further gain to 2,487 ringgit, said Reuters market analyst Wang Tao.
In other competing vegetable oil markets, the U.S. soyoil contract for July edged up 0.93 percent, in late Asian trading, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.5 percent. Palm, soy and crude oil prices at 1021 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN4 0 +0.00 0 0 0
MY PALM OIL JUL4 2433 +24.00 2409 2452 1273
MY PALM OIL AUG4 2427 +26.00 2403 2448 18502
CHINA PALM OLEIN SEP4 5816 +58.00 5780 5826 213400
CHINA SOYOIL SEP4 6680 +34.00 6664 6696 146968
CBOT SOY OIL JUL4 38.96 +0.38 38.59 39.05 5549
NYMEX CRUDE JUL4 107.04 +0.51 106.70 107.68 37537
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 = 3.2120 Ringgit) ($1 = 6.2057 Chinese Yuan)