MARKET DEVELOPMENT
VEGOILS-Palm Oil Ticks up From 1-Year Low; Rising Supply Weighs
VEGOILS-Palm Oil Ticks up From 1-Year Low; Rising Supply Weighs
* Palm oil remains pressured by data showing higher supply
* Weather report signals weak El Nino remains possible
* Expected to fall to range of 2,124-2,142 ringgit-technicals (Recasts)
13/08/2014 (Reuters) - Malaysian palm oil edged higher on Tuesday after sliding to its lowest in more than a year as some pressure from higher-than-expected stockpiles and prospects of rising global edible oil production were lifted by hopes of an El Nino weather pattern limiting crop output.
Palm prices extended losses to 2,162 ringgit per tonne in early trading on Tuesday, their lowest level since July 2013.
However, by market closing time, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,190 ringgit ($686) per tonne.
The pickup was partly a result of news from the Australian Bureau of Meteorology (BOM) that said there was still at least a 50 percent possibility of El Nino hitting this year, CIMB Analyst Ivy Ng said, in contrast to reports from several other weather bureaus that suggested it was less likely an El Nino would occur.
"A lot of people were depending on El Nino to affect the supply," Ng said.
According to the BOM report, sea temperatures in the Pacific Ocean had showed an increase over the past fortnight.
"Five of eight climate models surveyed by the Bureau suggest El Nino is likely for Spring. However, if El Nino were to occur, it is unlikely to be a strong event," the report said.
If El Nino emerges and is confirmed it could still provide support to palm prices, Ng said.
"The weather will play a very important part for the rest of the year to determine whether we've seen the bottom because a lot of crops are still in the growing phase," Ng said, noting that any increase in price would likely be limited because of declining prices in the competing edible oil markets.
Generally palm oil supplies around 50 percent of the edible oil trade globally, she said.
"Competing edible oils are having a good year in terms of weather, and they are producing better crops."
Consumers were buying less palm oil as a result.
"We are facing a bit more competition from the other edible oils. Consumers have more choices and more attractive prices."
Traders, however, remained skeptical. "The market still looks bad. Fundamentally, it's weak. Technically, it's weak, on the back of the MPOB (data) yesterday; and the export figure for the first 10 days (of August) was not friendly," said a trader with a foreign commodities brokerage in Kuala Lumpur, referring to the Malaysian Palm Oil Board (MPOB).
"Overseas today soybean oil was down too; so everything in the market moved southward."
The August contract made its biggest single-day decline in more than a year on Monday, after trade data showed an unexpected increase in palm end-stocks, and exports during the first 10 days in August fell by around 20 percent while output remained strong.
Total traded volume on Tuesday stood at 31,708 lots of 25 tonnes, well below the average 35,000 lots.
Technicals showed palm oil is expected to fall into a range of 2,124-2,142 ringgit per tonne, said Reuters market analyst Wang Tao.
In other markets, Brent crude oil fell to around $104 a barrel on Tuesday, touching its lowest level in nine months as steady supplies dispelled concerns over potential disruptions in producers including Iraq and Libya.
In other competing vegetable oil markets, the U.S. soyoil contract for August fell 0.88 percent in Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 1.34 percent. Palm, soy and crude oil prices at 1019 GMT Contract Month Last Change Low High Volume MY PALM OIL AUG4 2200 -30.00 2200 2230 30 MY PALM OIL SEP4 2215 +13.00 2189 2221 2413 MY PALM OIL OCT4 2190 +13.00 2162 2196 14698 CHINA PALM OLEIN JAN5 5570 -44.00 5544 5590 419232 CHINA SOYOIL JAN5 6322 -86.00 6308 6360 330574 CBOT SOY OIL DEC4 34.91 -0.30 34.87 35.25 6416 NYMEX CRUDE SEP4 97.21 -0.87 97.10 97.94 21199 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 = 3.1945 Malaysian ringgit) ($1 = 6.156 Chinese yuan)
* Weather report signals weak El Nino remains possible
* Expected to fall to range of 2,124-2,142 ringgit-technicals (Recasts)
13/08/2014 (Reuters) - Malaysian palm oil edged higher on Tuesday after sliding to its lowest in more than a year as some pressure from higher-than-expected stockpiles and prospects of rising global edible oil production were lifted by hopes of an El Nino weather pattern limiting crop output.
Palm prices extended losses to 2,162 ringgit per tonne in early trading on Tuesday, their lowest level since July 2013.
However, by market closing time, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,190 ringgit ($686) per tonne.
The pickup was partly a result of news from the Australian Bureau of Meteorology (BOM) that said there was still at least a 50 percent possibility of El Nino hitting this year, CIMB Analyst Ivy Ng said, in contrast to reports from several other weather bureaus that suggested it was less likely an El Nino would occur.
"A lot of people were depending on El Nino to affect the supply," Ng said.
According to the BOM report, sea temperatures in the Pacific Ocean had showed an increase over the past fortnight.
"Five of eight climate models surveyed by the Bureau suggest El Nino is likely for Spring. However, if El Nino were to occur, it is unlikely to be a strong event," the report said.
If El Nino emerges and is confirmed it could still provide support to palm prices, Ng said.
"The weather will play a very important part for the rest of the year to determine whether we've seen the bottom because a lot of crops are still in the growing phase," Ng said, noting that any increase in price would likely be limited because of declining prices in the competing edible oil markets.
Generally palm oil supplies around 50 percent of the edible oil trade globally, she said.
"Competing edible oils are having a good year in terms of weather, and they are producing better crops."
Consumers were buying less palm oil as a result.
"We are facing a bit more competition from the other edible oils. Consumers have more choices and more attractive prices."
Traders, however, remained skeptical. "The market still looks bad. Fundamentally, it's weak. Technically, it's weak, on the back of the MPOB (data) yesterday; and the export figure for the first 10 days (of August) was not friendly," said a trader with a foreign commodities brokerage in Kuala Lumpur, referring to the Malaysian Palm Oil Board (MPOB).
"Overseas today soybean oil was down too; so everything in the market moved southward."
The August contract made its biggest single-day decline in more than a year on Monday, after trade data showed an unexpected increase in palm end-stocks, and exports during the first 10 days in August fell by around 20 percent while output remained strong.
Total traded volume on Tuesday stood at 31,708 lots of 25 tonnes, well below the average 35,000 lots.
Technicals showed palm oil is expected to fall into a range of 2,124-2,142 ringgit per tonne, said Reuters market analyst Wang Tao.
In other markets, Brent crude oil fell to around $104 a barrel on Tuesday, touching its lowest level in nine months as steady supplies dispelled concerns over potential disruptions in producers including Iraq and Libya.
In other competing vegetable oil markets, the U.S. soyoil contract for August fell 0.88 percent in Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 1.34 percent. Palm, soy and crude oil prices at 1019 GMT Contract Month Last Change Low High Volume MY PALM OIL AUG4 2200 -30.00 2200 2230 30 MY PALM OIL SEP4 2215 +13.00 2189 2221 2413 MY PALM OIL OCT4 2190 +13.00 2162 2196 14698 CHINA PALM OLEIN JAN5 5570 -44.00 5544 5590 419232 CHINA SOYOIL JAN5 6322 -86.00 6308 6360 330574 CBOT SOY OIL DEC4 34.91 -0.30 34.87 35.25 6416 NYMEX CRUDE SEP4 97.21 -0.87 97.10 97.94 21199 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 = 3.1945 Malaysian ringgit) ($1 = 6.156 Chinese yuan)