MARKET DEVELOPMENT
Malaysia palm up
Malaysia palm up
29/12/05 KUALA LUMPUR (Reuters) - Malaysian palm oil recovered early losses to settle firm by Thursday’s midsession and dealers said they expected the market to end the year at above 1,400 ringgit in anticipation of a drawdown in stocks.
Both palm oil physicals and futures have been hovering above the psychologically important 1,400 ringgit-mark for a week after floods in Malaysia’s northern and eastern regions raised concerns about output from oil palm plantations.
December is traditionally a period of lower production for palm oil, but last week’s flooding could cut monthly volume by as much as 15 percent, compared to the initial forecast of 10 percent, said dealers.
Stocks of crude palm oil reached a record 1.6 million tonnes at end-November as demand cooled after the end of major festivals in Asia.
“If December’s production falls by anything more than 10 percent and exports do as well or better than last month, then we’re looking at a drop of up to half a million tonnes in stocks,“ a dealer said.
“That’s what’s keeping this market at above 1,400 ringgit.“
Societe Generale de Surveillance, a palm oil cargo tracker closely watched by the industry, said on Tuesday Malaysian exports of oil palm products for December 1-25 were down just 1.6 percent from the same period of November.
At Thursday’s lunch break, the benchmark third-month was up one ringgit at 1,412 ringgit ($373.35) a tonne after trading between 1,407 and 1,413 ringgit.
Other traded months were up 2 ringgit.
Volumes remained subdued, with many players away on year-end holidays. In morning trade, only 719 lots were done, compared with the 3,000 lots common during a busy first session.
In rival US soyoil, the trend was the opposite, with both spot and forward months showing sharp losses for a second-straight day.
March soyoil on the Chicago Board of Trade closed down 0.06 cent on Wednesday and fell a further 0.16 cent in Thursday’s electronic session, conducted during Asian business hours.
Soyoil and palm oil compete for exports and their prices often move in step.
In the physical market for crude palm oil, offers/bids for January stood at 1,410/1,405 ringgit a tonne, unchanged from Wednesday’s close. No trades were reported.
Both palm oil physicals and futures have been hovering above the psychologically important 1,400 ringgit-mark for a week after floods in Malaysia’s northern and eastern regions raised concerns about output from oil palm plantations.
December is traditionally a period of lower production for palm oil, but last week’s flooding could cut monthly volume by as much as 15 percent, compared to the initial forecast of 10 percent, said dealers.
Stocks of crude palm oil reached a record 1.6 million tonnes at end-November as demand cooled after the end of major festivals in Asia.
“If December’s production falls by anything more than 10 percent and exports do as well or better than last month, then we’re looking at a drop of up to half a million tonnes in stocks,“ a dealer said.
“That’s what’s keeping this market at above 1,400 ringgit.“
Societe Generale de Surveillance, a palm oil cargo tracker closely watched by the industry, said on Tuesday Malaysian exports of oil palm products for December 1-25 were down just 1.6 percent from the same period of November.
At Thursday’s lunch break, the benchmark third-month was up one ringgit at 1,412 ringgit ($373.35) a tonne after trading between 1,407 and 1,413 ringgit.
Other traded months were up 2 ringgit.
Volumes remained subdued, with many players away on year-end holidays. In morning trade, only 719 lots were done, compared with the 3,000 lots common during a busy first session.
In rival US soyoil, the trend was the opposite, with both spot and forward months showing sharp losses for a second-straight day.
March soyoil on the Chicago Board of Trade closed down 0.06 cent on Wednesday and fell a further 0.16 cent in Thursday’s electronic session, conducted during Asian business hours.
Soyoil and palm oil compete for exports and their prices often move in step.
In the physical market for crude palm oil, offers/bids for January stood at 1,410/1,405 ringgit a tonne, unchanged from Wednesday’s close. No trades were reported.