MARKET DEVELOPMENT
VEGOILS-Palm Oil Flat as Traders Seek Clues on Direction
VEGOILS-Palm Oil Flat as Traders Seek Clues on Direction
* Prices flat, traders await clearer signals
* Relative strength index shows market heavily oversold
* May fall to 2,046 ringgit per tonne - technicals (Recasts, adds quotes, changes throughout)
19/08/2014 (Reuters) - Malaysian palm oil was flat onMonday as traders awaited clearer signals on whether priceswould extend last week's fall to near five year lows, pushingthe market into oversold territory.
By Monday's close, the benchmark August contract onthe Bursa Malaysia Derivatives Exchange had inched down 0.29percent to 2,087 ringgit ($661) per tonne.
"This is very reflective of the indecisiveness that themarket has," said a trader with foreign commodities brokerage inKuala Lumpur.
"The market does not want to go down from here because thefundamentals do not warrant, but cannot go higher unless there'sa sign of increased demand," the trader said.
Prices of palm oil, the world's most traded vegetable oil,fell 6.2 percent last week, notching their biggest weekly dropsince March 2013, dragged down by projections of abundantsupplies of soybeans.
Palm typically tracks soyoil, a rival edible oil and commonfood and fuel substitute. Soy markets are facing pressure overforecasts of a bountiful soybean crop from top exporter theUnited States.
Traders said the market was now heavily oversold.
One trader described the relative strength index reading forMalaysian palm oil prices as "way beyond belief. Normally itbecomes oversold when it is 30, or lower than 30. This market isvery heavily oversold ... you don't get to see this very often.It looks like prices should recover very quickly."
Declining US soyoil prices could only impact palm prices toa certain point, beyond which palm becomes more attractive, onetrader said.
He said he expected to see an increase in palm prices overthe next two months.
"The world still has to live with palm oil for their fatneeds. Technically (soy oil prices) are coming off and they areputting pressure on our side, but if you see the differentialbetween palm olein and soybean oil, we are back to about $100,which fundamentally doesn't bode well for soybean oil."
"The market is looking for a new lead to see if prices willdecline further," the trader said, noting that participantswould be monitoring the performance of soybean oil trade on theDalian Commodities Exchange.
"The market will start recovering when people see signs ofexports growing and demand there," another trader said.
Total traded volume on Monday stood at 39,948 lots of 25tonnes, above the average 35,000 lots.
Technical charts showed palm oil prices may fall to 2,046ringgit per tonne, after breaking below support at 2,094ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude fell more than $1 to tradebelow $102.5 a barrel on Monday, as the threat of wider conflictin Ukraine diminished, oil output increased in Libya and worrieseased over supply from key producer Iraq.
In other competing vegetable oil markets, the U.S. soyoilcontract for August remained steady, slipping 0.06percent in early Asian trade, while the most active Septembersoybean oil contract on the Dalian Commodities Exchangefell 1.35 percent. Palm, soy and crude oil prices at 1055 GMT Contract Month Last Change Low High Volume MY PALM OIL SEP4 2098 -8.00 2096 2112 1042 MY PALM OIL OCT4 2087 -6.00 2084 2100 8470 MY PALM OIL NOV4 2087 -3.00 2083 2098 14434 CHINA PALM OLEIN JAN5 5298 -104.00 5284 5378 722948 CHINA SOYOIL JAN5 5996 -82.00 5954 6016 556398 CBOT SOY OIL DEC4 33.23 +0.02 33.11 33.41 6744 NYMEX CRUDE SEP4 96.38 -0.97 96.24 97.16 11690 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 = 3.155 Malaysian ringgit) ($1 = 6.1425 Chinese yuan)
* Relative strength index shows market heavily oversold
* May fall to 2,046 ringgit per tonne - technicals (Recasts, adds quotes, changes throughout)
19/08/2014 (Reuters) - Malaysian palm oil was flat onMonday as traders awaited clearer signals on whether priceswould extend last week's fall to near five year lows, pushingthe market into oversold territory.
By Monday's close, the benchmark August contract onthe Bursa Malaysia Derivatives Exchange had inched down 0.29percent to 2,087 ringgit ($661) per tonne.
"This is very reflective of the indecisiveness that themarket has," said a trader with foreign commodities brokerage inKuala Lumpur.
"The market does not want to go down from here because thefundamentals do not warrant, but cannot go higher unless there'sa sign of increased demand," the trader said.
Prices of palm oil, the world's most traded vegetable oil,fell 6.2 percent last week, notching their biggest weekly dropsince March 2013, dragged down by projections of abundantsupplies of soybeans.
Palm typically tracks soyoil, a rival edible oil and commonfood and fuel substitute. Soy markets are facing pressure overforecasts of a bountiful soybean crop from top exporter theUnited States.
Traders said the market was now heavily oversold.
One trader described the relative strength index reading forMalaysian palm oil prices as "way beyond belief. Normally itbecomes oversold when it is 30, or lower than 30. This market isvery heavily oversold ... you don't get to see this very often.It looks like prices should recover very quickly."
Declining US soyoil prices could only impact palm prices toa certain point, beyond which palm becomes more attractive, onetrader said.
He said he expected to see an increase in palm prices overthe next two months.
"The world still has to live with palm oil for their fatneeds. Technically (soy oil prices) are coming off and they areputting pressure on our side, but if you see the differentialbetween palm olein and soybean oil, we are back to about $100,which fundamentally doesn't bode well for soybean oil."
"The market is looking for a new lead to see if prices willdecline further," the trader said, noting that participantswould be monitoring the performance of soybean oil trade on theDalian Commodities Exchange.
"The market will start recovering when people see signs ofexports growing and demand there," another trader said.
Total traded volume on Monday stood at 39,948 lots of 25tonnes, above the average 35,000 lots.
Technical charts showed palm oil prices may fall to 2,046ringgit per tonne, after breaking below support at 2,094ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude fell more than $1 to tradebelow $102.5 a barrel on Monday, as the threat of wider conflictin Ukraine diminished, oil output increased in Libya and worrieseased over supply from key producer Iraq.
In other competing vegetable oil markets, the U.S. soyoilcontract for August remained steady, slipping 0.06percent in early Asian trade, while the most active Septembersoybean oil contract on the Dalian Commodities Exchangefell 1.35 percent. Palm, soy and crude oil prices at 1055 GMT Contract Month Last Change Low High Volume MY PALM OIL SEP4 2098 -8.00 2096 2112 1042 MY PALM OIL OCT4 2087 -6.00 2084 2100 8470 MY PALM OIL NOV4 2087 -3.00 2083 2098 14434 CHINA PALM OLEIN JAN5 5298 -104.00 5284 5378 722948 CHINA SOYOIL JAN5 5996 -82.00 5954 6016 556398 CBOT SOY OIL DEC4 33.23 +0.02 33.11 33.41 6744 NYMEX CRUDE SEP4 96.38 -0.97 96.24 97.16 11690 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 = 3.155 Malaysian ringgit) ($1 = 6.1425 Chinese yuan)