KUALA LUMPUR: Malaysian palm oil futures rose to their highest in one-and-a-half months on Tuesday and recorded their biggest monthly rise in more than five years, as strong export demand and gains in Chinese soyoil markets lifted sentiment.
Despite the swift recovery in palm prices this month,
underlying concerns about swelling oilseed supplies capped the
rally and pulled palm to post its biggest quarterly drop in two
years.
Exports of Malaysian palm oil products for September rose
16.3 percent from a month earlier to 1,497,828 tonnes, cargo
surveyor Intertek Testing Services said, thanks to robust demand
from India, China and Europe.
Another cargo surveyor Societe Generale de Surveillance
showed that exports for the same period rose 16.5 percent. Both
surveyors reported bigger crude palm oil shipments compared to
August.
The recovery in export demand would help prevent another
jump in inventories in the No.2 producer, traders said.
"The market is holding very well on the back of exports and
the Dalian which is up a bit," said a trader with a foreign
commodities brokerage in Kuala Lumpur. "It's in a trading range
between 2,170 and 2,250 ringgit."
"But most commodity prices are in the doldrums, especially
the whole grain complex. I don't think palm oil will be spared."
The benchmark December contract on the Bursa
Malaysia Derivatives Exchange rose to 2,222 ringgit in late
trade, the highest since Aug. 11, before settling at 2,216
ringgit ($676) per tonne at Tuesday's close, a 1.3 percent gain.
Palm prices have gained nearly 15 percent this month to
notch their biggest monthly gain since April 2009, after
plunging to a more-than-five-year low of 1,914 ringgit in early
September.
The tropical oil, however, has lost 8.7 percent in the third
quarter of this year to post its biggest quarterly loss since
2012.
Total traded volume stood at 43,225 lots of 25 tonnes each,
above the usual 35,000 lots.
Technicals indicate palm oil may climb to a resistance at
2,224 ringgit, a break above which will lead to a further gain
to 2,262 ringgit, according to market analyst Wang Tao. He added
that the first support is at 2,163 ringgit and the second at
2,125 ringgit.
Chicago soybeans eased and were on track for their
biggest quarterly loss in six years, with a more than 34 percent
drop, on pressure from mounting U.S. supplies and a
strengthening dollar.
Higher supplies of soybeans for crushing would drag on
soyoil prices and narrow palm's discount to the rival edible
oil, and could potentially prompt buyers to switch over food and
fuel needs to soy.
In vegetable oil markets, the U.S. soyoil contract for
December fell 0.5 percent in late Asian trade. The most
active January soybean oil contract on the Dalian
Commodities Exchange gained 1.1 percent.
Market players will also be keeping a close watch on
Malaysia's palm oil inventories in September, after stocks
jumped 22 percent to 2.05 million tonnes at end-August.
A recovery in export demand in September after Malaysia
scrapped export duties on the crude grade raised hopes that
stockpiles would not continue to surge.
"End stocks are very important -- it could be marginally
higher, or we could see a drawdown in September," the trader
added.
Indonesia, as expected, also scrapped its crude palm oil
export tax for October.
The top producer on Tuesday also approved a plantations bill
that aims to maximise land usage and open up the sector to
smallholders, but dropped a controversial foreign ownership
clause that had worried oil palm planters.
In other markets, Brent oil steadied above $97 a barrel on
Tuesday, supported by U.S. and Chinese economic data, but was
still set for its deepest quarterly drop in more than two years
because of strong supply and a surging dollar.
Palm, soy and crude oil prices at 1016 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 2233 +31.00 2223 2237 119
MY PALM OIL NOV4 2228 +34.00 2207 2232 5010
MY PALM OIL DEC4 2216 +28.00 2204 2222 21988
CHINA PALM OLEIN JAN5 5240 +72.00 5176 5250 558414
CHINA SOYOIL JAN5 5898 +62.00 5890 5958 313544
CBOT SOY OIL DEC4 32.79 +0.60 32.66 33.02 6874
INDIA PALM OIL SEP4 474.20 +0.60 473.10 474.40 276
INDIA SOYOIL OCT4 616.90 -0.85 616.40 620.00 17950
NYMEX CRUDE NOV4 94.75 +0.18 94.18 94.90 22978
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 = 3.279 Malaysian ringgit)
($1 = 6.1395 Chinese yuan)
($1 = 61.71 Indian rupees)
- Reuetrs
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