MARKET DEVELOPMENT
VEGOILS-Weak Soy, Fears of Rising Stocks Drag Palm to Near 3-Wk Low
VEGOILS-Weak Soy, Fears of Rising Stocks Drag Palm to Near 3-Wk Low
(Updates prices)
* Prices drop to 2,385 rgt in early trade, lowest since June 12
* Losses in soybean oil markets, fears of rising stocks pressure prices -trader
* Palm oil to fall to 2,341 ringgit -technicals
02/07/2014 (Reuters) - Malaysian palm oil futures slid to a near three-week low on Tuesday, stretching its losing streak into a fourth session following heavy losses in overseas soyoil markets, and as investors fretted about rising stocks of the tropical oil.
Soybean prices fell to near four-month lows after the U.S. Department of Agriculture surprised the market with projections for bigger stockpiles and record production late Monday.
USDA reported June 1 soybean stocks at 405 million bushels, above market estimates of 378 million, and forecast soybean plantings up 11 percent on year to a record high 84.8 million acres.
Bigger supplies of soybeans for crushing would weaken soyoil prices and narrow its premium over palm oil, which could prompt price-sensitive buyers to switch to rival edible oil instead.
"The major factor is the weakness in soybean oil, due to record high planting acreage, which was confirmed by the recent USDA report. That is the main reason why palm prices fell sharply today and is still maintaining at the low," said a trader with a local commodities brokerage.
Plantation analysts at RHB Research Institute said in a note on Tuesday that the fall in soybean and soybean oil prices will likely put pressure on palm oil prices in the immediate term.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell to a June 12 low of 2,385 ringgit in early trade, before settling at 2,418 ringgit ($754) per tonne by Tuesday's close, a 0.3 percent drop.
Total traded volume stood at 57,586 lots of 25 tonnes, much higher than the average 35,000 lots.
Technicals showed that Malaysian palm oil is expected to slide more to 2,341 ringgit per tonne, as it has broken below a support at 2,422 ringgit, said Reuters market analyst Wang Tao.
Malaysian palm prices fell nearly 8 percent in the second-quarter this year to record its biggest quarterly loss since Sept. 2012, hurt by poor export demand, a strong ringgit and rising inventory levels.
Market participants said the prospects of bigger stockpiles in Malaysia, which have grown continuously since March to stand at 1.84 million tonnes at end-May, will likely continue to pressure prices despite a small pick up in export demand. "There's the fear of rising palm stocks," the Kuala Lumpur-based trader added. "The recent better exports is not going to stop stocks from rising above two million tonnes in 2-3 months time."
Cargo surveyors on Monday reported that exports of Malaysian palm oil product rose between 4.6-5.8 percent in June compared to a month ago, thanks to firm demand from India and China.
In competing vegetable oil markets, the most active soybean oil contract on the Dalian Commodities Exchange plunged 2.7 percent in late Asian trade, while the U.S. soyoil contract edged up 0.3 percent.
In other markets, Brent oil held above $112 per barrel on Tuesday as investors took heart from upbeat manufacturing data in China while ongoing tensions in Iraq and Ukraine underpinned supply concerns.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2435 -13.00 2402 2443 148
MY PALM OIL AUG4 2429 -11.00 2398 2436 1717
MY PALM OIL SEP4 2418 -8.00 2385 2425 22607
CHINA PALM OLEIN JAN5 5786 -160.00 5732 5844 410288
CHINA SOYOIL JAN5 6768 -188.00 6722 6812 537178
CBOT SOY OIL DEC4 39.28 +0.13 39.03 39.41 8857
NYMEX CRUDE AUG4 105.77 +0.40 105.43 105.93 13383
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 = 3.2060 Malaysian ringgit)
($1 = 6.2016 Chinese yuan)
* Prices drop to 2,385 rgt in early trade, lowest since June 12
* Losses in soybean oil markets, fears of rising stocks pressure prices -trader
* Palm oil to fall to 2,341 ringgit -technicals
02/07/2014 (Reuters) - Malaysian palm oil futures slid to a near three-week low on Tuesday, stretching its losing streak into a fourth session following heavy losses in overseas soyoil markets, and as investors fretted about rising stocks of the tropical oil.
Soybean prices fell to near four-month lows after the U.S. Department of Agriculture surprised the market with projections for bigger stockpiles and record production late Monday.
USDA reported June 1 soybean stocks at 405 million bushels, above market estimates of 378 million, and forecast soybean plantings up 11 percent on year to a record high 84.8 million acres.
Bigger supplies of soybeans for crushing would weaken soyoil prices and narrow its premium over palm oil, which could prompt price-sensitive buyers to switch to rival edible oil instead.
"The major factor is the weakness in soybean oil, due to record high planting acreage, which was confirmed by the recent USDA report. That is the main reason why palm prices fell sharply today and is still maintaining at the low," said a trader with a local commodities brokerage.
Plantation analysts at RHB Research Institute said in a note on Tuesday that the fall in soybean and soybean oil prices will likely put pressure on palm oil prices in the immediate term.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell to a June 12 low of 2,385 ringgit in early trade, before settling at 2,418 ringgit ($754) per tonne by Tuesday's close, a 0.3 percent drop.
Total traded volume stood at 57,586 lots of 25 tonnes, much higher than the average 35,000 lots.
Technicals showed that Malaysian palm oil is expected to slide more to 2,341 ringgit per tonne, as it has broken below a support at 2,422 ringgit, said Reuters market analyst Wang Tao.
Malaysian palm prices fell nearly 8 percent in the second-quarter this year to record its biggest quarterly loss since Sept. 2012, hurt by poor export demand, a strong ringgit and rising inventory levels.
Market participants said the prospects of bigger stockpiles in Malaysia, which have grown continuously since March to stand at 1.84 million tonnes at end-May, will likely continue to pressure prices despite a small pick up in export demand. "There's the fear of rising palm stocks," the Kuala Lumpur-based trader added. "The recent better exports is not going to stop stocks from rising above two million tonnes in 2-3 months time."
Cargo surveyors on Monday reported that exports of Malaysian palm oil product rose between 4.6-5.8 percent in June compared to a month ago, thanks to firm demand from India and China.
In competing vegetable oil markets, the most active soybean oil contract on the Dalian Commodities Exchange plunged 2.7 percent in late Asian trade, while the U.S. soyoil contract edged up 0.3 percent.
In other markets, Brent oil held above $112 per barrel on Tuesday as investors took heart from upbeat manufacturing data in China while ongoing tensions in Iraq and Ukraine underpinned supply concerns.
Palm, soy and crude oil prices at 1007 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2435 -13.00 2402 2443 148
MY PALM OIL AUG4 2429 -11.00 2398 2436 1717
MY PALM OIL SEP4 2418 -8.00 2385 2425 22607
CHINA PALM OLEIN JAN5 5786 -160.00 5732 5844 410288
CHINA SOYOIL JAN5 6768 -188.00 6722 6812 537178
CBOT SOY OIL DEC4 39.28 +0.13 39.03 39.41 8857
NYMEX CRUDE AUG4 105.77 +0.40 105.43 105.93 13383
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 = 3.2060 Malaysian ringgit)
($1 = 6.2016 Chinese yuan)