MARKET DEVELOPMENT
VEGOILS-Palm Snaps 4-Day Losing Streak on Short-covering, Higher Supply Weighs
VEGOILS-Palm Snaps 4-Day Losing Streak on Short-covering, Higher Supply Weighs
* Palm ends higher, snaps 4-day losing streak
* Stocks seen rising 5 pct in June, but biodiesel demand to support prices -analyst
* Palm oil to revisit low of 2,385 ringgit - technicals
03/07/2014 (Reuters) - Malaysian palm oil futures ended higher on Wednesday, reversing losses early in session to snap a four-day losing streak on short-covering by traders after prices fell to near three-week lows, although concerns of rising edible oil supplies capped gains.
Prices slid on Tuesday to a June 12 low of 2,385 ringgit, following overseas soy markets that plunged after the U.S. Department of Agriculture surprised traders with projections for bigger stocks and record production of the oilseed.
"There was a bit of intraday short-covering," said a trader with a local commodities brokerage in Malaysia.
"The unusual movement in yesterday's session when prices went up from 2,405 ringgit to 2,424 ringgit in the last 10 minutes of trade is also keeping players on the cautious side," the trader added.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange ended up 0.3 percent at 2,425 ringgit ($757) per tonne, with prices range-bound between 2,405-2,436 ringgit.
Trading volumes were thin at only 27,522 lots of 25 tonnes compared with the daily average of 35,000 lots.
"The palm market is very lethargic. There's minimum movement in overseas soybean oils, so there's minimum impact on our market today," said another Kuala Lumpur-based trader.
Palm typically tracks soyoil, a rival food and fuel substitute.
The most active soybean oil contract on the Dalian Commodities Exchange rose 0.2 percent in late Asian trade, while the U.S. soyoil contract was up 0.3 percent.
Technicals were bearish. Malaysian palm oil is expected to revisit its July 1 low of 2,385 ringgit per tonne, as indicated by a Fibonacci projection analysis, said Reuters market analyst Wang Tao.
Prospects of bigger stockpiles in Malaysia, the world's second-largest oil palm grower, also pressured the market, although some analysts said biodiesel demand will likely underpin prices going forward.
"While we do expect June palm oil inventory to gain 5 percent to 1.93 million metric tonnes, the downside in CPO prices should be limited to 2,350 ringgit per tonne as this is the level where we expect biodiesel producers in Indonesia to be profitable," said Kenanga Investment Bank analyst Alan Lim. "This should naturally spur discretionary demand in Indonesia and prevent further fall in CPO prices," Lim said in a note on Wednesday.
Malaysian palm stocks have grown continuously since March to stand at 1.84 million tonnes at end-May.
In other markets, oil fell towards $111 a barrel on Wednesday, its lowest in almost three weeks, on a possible substantial recovery in Libyan exports after rebels said they would reopen two oil terminals.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2451 +16.00 2430 2457 194
MY PALM OIL AUG4 2442 +11.00 2422 2454 929
MY PALM OIL SEP4 2425 +6.00 2405 2436 12063
CHINA PALM OLEIN JAN5 5820 +20.00 5792 5840 221272
CHINA SOYOIL JAN5 6780 +10.00 6770 6814 258232
CBOT SOY OIL DEC4 39.36 +0.13 39.07 39.38 5827
NYMEX CRUDE AUG4 104.88 -0.46 104.83 105.50 13819
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 = 3.202 Malaysian ringgit)
($1 = 6.2106 Chinese yuan)
* Stocks seen rising 5 pct in June, but biodiesel demand to support prices -analyst
* Palm oil to revisit low of 2,385 ringgit - technicals
03/07/2014 (Reuters) - Malaysian palm oil futures ended higher on Wednesday, reversing losses early in session to snap a four-day losing streak on short-covering by traders after prices fell to near three-week lows, although concerns of rising edible oil supplies capped gains.
Prices slid on Tuesday to a June 12 low of 2,385 ringgit, following overseas soy markets that plunged after the U.S. Department of Agriculture surprised traders with projections for bigger stocks and record production of the oilseed.
"There was a bit of intraday short-covering," said a trader with a local commodities brokerage in Malaysia.
"The unusual movement in yesterday's session when prices went up from 2,405 ringgit to 2,424 ringgit in the last 10 minutes of trade is also keeping players on the cautious side," the trader added.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange ended up 0.3 percent at 2,425 ringgit ($757) per tonne, with prices range-bound between 2,405-2,436 ringgit.
Trading volumes were thin at only 27,522 lots of 25 tonnes compared with the daily average of 35,000 lots.
"The palm market is very lethargic. There's minimum movement in overseas soybean oils, so there's minimum impact on our market today," said another Kuala Lumpur-based trader.
Palm typically tracks soyoil, a rival food and fuel substitute.
The most active soybean oil contract on the Dalian Commodities Exchange rose 0.2 percent in late Asian trade, while the U.S. soyoil contract was up 0.3 percent.
Technicals were bearish. Malaysian palm oil is expected to revisit its July 1 low of 2,385 ringgit per tonne, as indicated by a Fibonacci projection analysis, said Reuters market analyst Wang Tao.
Prospects of bigger stockpiles in Malaysia, the world's second-largest oil palm grower, also pressured the market, although some analysts said biodiesel demand will likely underpin prices going forward.
"While we do expect June palm oil inventory to gain 5 percent to 1.93 million metric tonnes, the downside in CPO prices should be limited to 2,350 ringgit per tonne as this is the level where we expect biodiesel producers in Indonesia to be profitable," said Kenanga Investment Bank analyst Alan Lim. "This should naturally spur discretionary demand in Indonesia and prevent further fall in CPO prices," Lim said in a note on Wednesday.
Malaysian palm stocks have grown continuously since March to stand at 1.84 million tonnes at end-May.
In other markets, oil fell towards $111 a barrel on Wednesday, its lowest in almost three weeks, on a possible substantial recovery in Libyan exports after rebels said they would reopen two oil terminals.
Palm, soy and crude oil prices at 1005 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL4 2451 +16.00 2430 2457 194
MY PALM OIL AUG4 2442 +11.00 2422 2454 929
MY PALM OIL SEP4 2425 +6.00 2405 2436 12063
CHINA PALM OLEIN JAN5 5820 +20.00 5792 5840 221272
CHINA SOYOIL JAN5 6780 +10.00 6770 6814 258232
CBOT SOY OIL DEC4 39.36 +0.13 39.07 39.38 5827
NYMEX CRUDE AUG4 104.88 -0.46 104.83 105.50 13819
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 = 3.202 Malaysian ringgit)
($1 = 6.2106 Chinese yuan)