KUALA LUMPUR: Malaysian palm oil futures slid to a five-and-a-half year low on Friday due to fears of rising vegetable oil supply and lower demand, resulting in its biggest monthly loss since September 2012.
The benchmark November contract on the Bursa Malaysia Derivatives
Exchange shed 2.5 percent to 1,930 ringgit ($613) per tonne by the close. For
the week, the contract fell 3.5 percent to post its fourth straight week of
losses.
Prices in August have plunged 14.5 percent, their biggest monthly drop in
nearly two years.
Total traded volume amounted to 59,300 lots of 25 tonnes, much higher than
the average 35,000 lots. Investors rushed to take positions ahead of a long
weekend, pushing prices as low as 1,926 ringgit, their lowest since March 20,
2009.
"As palm oil hit a multi-year low, it attracted speculators who see value in
the price to go long on the commodity, as they try to catch a falling knife," a
Singapore-based palm trader said.
"The weak sentiment coupled with lacklustre demand over the past few days
have doused the initial exuberance, and some may be tempted to unwind long
positions before the long weekend. If soybean oil gets hammered, palm oil may
gap down after the holiday."
Malaysian markets will be closed on Monday for Independence Day holiday.
From a technical perspective, Malaysian palm oil may fall as low as 1,920
after breaking support at 1,950 ringgit, driven by a wave 5, said Reuters market
analyst Wang Tao.
Malaysia's Sime Darby Bhd
sees palm oil prices trading at 1,900 to
2,200 ringgit a tonne in the next four months due to forecasts of bumper soybean
crops in the United States, lagging biodiesel uptake and a rise in palm oil
stocks in both Malaysia and Indonesia.
Mohd Bakke Salleh, the group CEO and president at the world's top oil palm
planter by acreage, added that initial fears of damage to crops from the El Nino
weather phenomenon had also subsided, adding to price pressure.
Investors also WERE cautious ahead of full-month export data due to be
released on Tuesday.
Malaysian overseas sales of palm oil products have been lacklustre so far in
August. Shipments in Aug. 1-25 fell 11-15 percent from the same period in July,
due to poor take-up in Europe and China.
Forecasts of good-to-excellent crop ratings for soybeans have pressured palm
prices. Bumper supplies of soybeans for crushing into soyoil would channel food
and fuel demand away from palm.
The U.S. soyoil contract for December lost 0.4 percent in late Asian
trade. The most active January soybean oil contract on the Dalian
Commodities Exchange fell 0.1 percent.
In other markets, Brent crude oil rose towards $103 a barrel on Friday as
escalating violence in Ukraine kept Europe's markets on edge, but prices were
still on track for a monthly loss as ample supply and weak demand outweighed
political concerns.
Palm, soy and crude oil prices at 1040 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 1940 -47.00 1922 1979 401
MY PALM OIL OCT4 1929 -47.00 1927 1980 2921
MY PALM OIL NOV4 1930 -50.00 1926 1984 22632
CHINA PALM OLEIN JAN5 5196 +2.00 5170 5216 384972
CHINA SOYOIL JAN5 6058 -6.00 6034 6108 434602
CBOT SOY OIL DEC4 32.67 -0.12 32.62 32.94 4242
INDIA SOYOIL SEP4 0.00 +0.00 0.00 0.00 0
NYMEX CRUDE OCT4 94.96 +0.41 94.48 95.15 23411
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
($1 = 3.15 Malaysian ringgit)
($1 = 6.1432 Chinese yuan)
($1 = 60.50 Indian rupee)
- Reuters
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