MARKET DEVELOPMENT
VEGOILS-Palm Slips to Near 10-Mth Low on External Pressures; Tight Supplies Seen
VEGOILS-Palm Slips to Near 10-Mth Low on External Pressures; Tight Supplies Seen
* External conditions bearish, but palm is friendly - trader
* Palm oil to fall into 2,250-2,268 ringgit range-technicals
* Indonesian palm oil exports may fall 9.5 pct in 2014-sector body
23/07/2014 (Reuters) - Malaysian palm oil futures slipped to a near 10-month low on Tuesday, following losses in Chinese soy markets and on worries of bumper soy crops, although anticipation of tighter palm supplies curbed losses.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,272 ringgit per tonne in late trade, their lowest since Sept. 27, before settling at 2,280 ringgit ($718) by the day's close, a 0.7 percent drop.
While bearish external factors such as forecasts for an excellent soybean harvest and weakness in comparative soyoil markets continue to weigh on palm, market participants said prices were underpinned by prospects of a palm oil supply squeeze in the coming months.
"Prices are drifting sideways now - external conditions are bearish, but palm is friendly," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"At these levels, you can see a lot of buying coming in. We have seen people locking in positions in the forwards, because it is even cheaper than the nearby months."
Palm oil inventories in Malaysia, the world's No.2 producer, slid to a 1-year low of 1.66 million tonnes at end-June.
Traders and analysts say stocks could continue to shrink, due to robust export demand and with output slated to fall as plantation workers go on holiday ahead of a Muslim festival at the end of this month.
"Stocks are currently very tight and this month's stocks will be even tighter. This is providing a strong support base for palm," the trader added.
Total traded volume on Tuesday stood at 35,753 lots of 25 tonnes, just above the average 35,000 lots.
Technicals show Malaysian palm oil is expected to fall into a range of 2,250-2,268 ringgit per tonne, driven by a wave 3, said Reuters market analyst Wang Tao.
"This is the third wave of a five-wave cycle that developed from the June 25 high of 2,511 ringgit. It has a fierce character and may eventually travel to 2,220 ringgit, its 161.8 percent projection level," Tao added.
Better harvesting conditions for the U.S. soybean crop have paved the way for a bumper supply of the competing oilseed, which would weaken soyoil prices and potentially channel food and fuel demand away from palm.
The U.S. Department of Agriculture reported that soybean conditions improved during the past week to the best level in 20 years, surprising several analysts who expected steady to lower soy ratings.
Firm export data in July, however, signalled a recovery in demand for the tropical oil.
Cargo surveyors reported that exports of Malaysian palm oil products during July 1-20 rose between 8 and 10 percent from a month ago, with exports to China nearly doubling compared with the same period in June.
Indonesia, the world's biggest palm grower, said it expects to export between 19 million and 20 million tonnes of palm oil in 2014, a decline of up to 9.5 percent from the 21 million tonnes sold last year.
Its leading industry body, Indonesian Palm Oil Association (GAPKI), cited higher costs of logistics and shipping, as well as a "black campaign" against Indonesian palm oil that continues to impact its sales in the global market.
Indonesian exports in the first half of 2014 amounted to 9.75 million tonnes, down from around 11 million tonnes in the first half of 2013, according to GAPKI.
Malaysia exported 8.1 million tonnes in the same period, compared with 8.8 million tonnes last year, according to data from industry regulator the Malaysian Palm Oil Board.
In competing vegetable oil markets, the U.S. soyoil contract was nearly flat in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
In other markets, Brent crude steadied around $108 a barrel on Tuesday, supported by expectations of large draws in U.S. oil stockpiles and escalating geopolitical tension over Ukraine causing European foreign ministers to consider further sanctions on Russia.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG4 2368 -5.00 2356 2375 1015
MY PALM OIL SEP4 2314 -11.00 2305 2321 3444
MY PALM OIL OCT4 2280 -16.00 2272 2293 15068
CHINA PALM OLEIN JAN5 5644 -44.00 5592 5676 564984
CHINA SOYOIL JAN5 6420 -24.00 6390 6426 265184
CBOT SOY OIL DEC4 36.25 -0.01 36.25 36.48 3058
NYMEX CRUDE AUG4 105.18 +0.59 104.48 105.24 2069
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 = 3.1740 Malaysian ringgit)
($1 = 6.2037 Chinese yuan)
* Palm oil to fall into 2,250-2,268 ringgit range-technicals
* Indonesian palm oil exports may fall 9.5 pct in 2014-sector body
23/07/2014 (Reuters) - Malaysian palm oil futures slipped to a near 10-month low on Tuesday, following losses in Chinese soy markets and on worries of bumper soy crops, although anticipation of tighter palm supplies curbed losses.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,272 ringgit per tonne in late trade, their lowest since Sept. 27, before settling at 2,280 ringgit ($718) by the day's close, a 0.7 percent drop.
While bearish external factors such as forecasts for an excellent soybean harvest and weakness in comparative soyoil markets continue to weigh on palm, market participants said prices were underpinned by prospects of a palm oil supply squeeze in the coming months.
"Prices are drifting sideways now - external conditions are bearish, but palm is friendly," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"At these levels, you can see a lot of buying coming in. We have seen people locking in positions in the forwards, because it is even cheaper than the nearby months."
Palm oil inventories in Malaysia, the world's No.2 producer, slid to a 1-year low of 1.66 million tonnes at end-June.
Traders and analysts say stocks could continue to shrink, due to robust export demand and with output slated to fall as plantation workers go on holiday ahead of a Muslim festival at the end of this month.
"Stocks are currently very tight and this month's stocks will be even tighter. This is providing a strong support base for palm," the trader added.
Total traded volume on Tuesday stood at 35,753 lots of 25 tonnes, just above the average 35,000 lots.
Technicals show Malaysian palm oil is expected to fall into a range of 2,250-2,268 ringgit per tonne, driven by a wave 3, said Reuters market analyst Wang Tao.
"This is the third wave of a five-wave cycle that developed from the June 25 high of 2,511 ringgit. It has a fierce character and may eventually travel to 2,220 ringgit, its 161.8 percent projection level," Tao added.
Better harvesting conditions for the U.S. soybean crop have paved the way for a bumper supply of the competing oilseed, which would weaken soyoil prices and potentially channel food and fuel demand away from palm.
The U.S. Department of Agriculture reported that soybean conditions improved during the past week to the best level in 20 years, surprising several analysts who expected steady to lower soy ratings.
Firm export data in July, however, signalled a recovery in demand for the tropical oil.
Cargo surveyors reported that exports of Malaysian palm oil products during July 1-20 rose between 8 and 10 percent from a month ago, with exports to China nearly doubling compared with the same period in June.
Indonesia, the world's biggest palm grower, said it expects to export between 19 million and 20 million tonnes of palm oil in 2014, a decline of up to 9.5 percent from the 21 million tonnes sold last year.
Its leading industry body, Indonesian Palm Oil Association (GAPKI), cited higher costs of logistics and shipping, as well as a "black campaign" against Indonesian palm oil that continues to impact its sales in the global market.
Indonesian exports in the first half of 2014 amounted to 9.75 million tonnes, down from around 11 million tonnes in the first half of 2013, according to GAPKI.
Malaysia exported 8.1 million tonnes in the same period, compared with 8.8 million tonnes last year, according to data from industry regulator the Malaysian Palm Oil Board.
In competing vegetable oil markets, the U.S. soyoil contract was nearly flat in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.
In other markets, Brent crude steadied around $108 a barrel on Tuesday, supported by expectations of large draws in U.S. oil stockpiles and escalating geopolitical tension over Ukraine causing European foreign ministers to consider further sanctions on Russia.
Palm, soy and crude oil prices at 1008 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG4 2368 -5.00 2356 2375 1015
MY PALM OIL SEP4 2314 -11.00 2305 2321 3444
MY PALM OIL OCT4 2280 -16.00 2272 2293 15068
CHINA PALM OLEIN JAN5 5644 -44.00 5592 5676 564984
CHINA SOYOIL JAN5 6420 -24.00 6390 6426 265184
CBOT SOY OIL DEC4 36.25 -0.01 36.25 36.48 3058
NYMEX CRUDE AUG4 105.18 +0.59 104.48 105.24 2069
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 = 3.1740 Malaysian ringgit)
($1 = 6.2037 Chinese yuan)