27.11.2018 (The Edge Markets MY) - JAKARTA (Nov 27): Malaysian palm oil futures fell to a fresh 39-month low on Tuesday before reversing course to close the first-half session with marginal gains.

Palm oil tumbled 3.5% on Monday, the sharpest since Feb 16 last year, after top exporter Indonesia said it would temporarily remove the levy as a sharp drop in prices hit its farmers.

This could make Indonesian palm oil more competitive compared to Malaysia's, traders said.

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was up 0.2% at RM1,976 (US$471.37) per tonne by the midday break on Tuesday.

Earlier in the session, it hit its lowest since August 2015 at RM1,940 per tonne.

Traded volumes stood at 27,186 lots of 25 tonnes each.

Palm oil prices have dropped to a level close to production costs for some plantations, said a Kuala Lumpur-based trader, adding that this might prevent some producers from selling their products.

"It is not a bullish factor, but at least it will limit some of the selling, providing some support to palm," said the trader.

However, global demand for the vegetable oil remains sluggish. So, prices are unlikely to pick up even though low prices may look attractive to some buyers, the trader added.

Shipments of Malaysian palm oil products for Nov 1-20 fell 9.8% from a month earlier, cargo surveyor Societe Generale de Surveillance said on Tuesday.

Among potential supports for palm oil was Malaysia's revisions to its biodiesel content rules which will raise the minimum bio-content that local producers must put in biodiesel to be used in transport to 10% from 7% at present.

In other related oils, the Chicago soybean oil contract for December was up 0.48%, while the January soybean oil contract on the Dalian Commodity Exchange was down 0.3%.

Meanwhile, the Dalian January palm oil contract was 1.4% lower.

Palm oil prices are affected by movements of other edible oils as they compete for a share in the global vegetable oils market.

Crude oil prices, which also affect the palm oil market, slumped nearly 8% to their lowest in more than a year on Friday, posting the seventh consecutive weekly drop, amid intensifying fears of a supply glut.

 

Palm, soy and crude oil prices at 0503 GMT

Contract	Month	Last	Change	Low	High	Volume
MY PALM OIL	DEC8	1821	36	1750	1821	176
MY PALM OIL	JAN9	1900	3	1857	1900	3761
MY PALM OIL	FEB9	1976	4	1940	1977	12267
CHINA PALM OLEIN	JAN9	4142	-58	4100	4156	371588
CHINA SOYOIL	JAN9	5394	-16	5378	5426	177492
CBOT SOY OIL	DEC8	27.09	0.13	26.95	27.11	1675
INDIA PALM OIL	NOV8	499	3.8	498.2	499.6	13
INDIA SOYOIL	DEC8	717.5	1.3	715.7	718.5	990
NYMEX CRUDE	JAN9	51.5	-0.13	51.11	51.69	32748

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.1920)
(US$1 = 70.8550 Indian rupees)
(US$1 = 6.9436 Chinese yuan)