KUALA LUMPUR: Malaysian palm oil futures ended higher on Friday on concerns over monsoon rains hurting output and as crude prices ticked up, but the recovery was not enough to keep palm from its biggest weekly fall in three.
Brent crude oil rose above $60 a barrel on Friday,
recovering from near a 5-1/2-year low as investors squared books
ahead of the year-end festive break after six months of falling
prices.
But oil prices were on track for a fourth straight week of
declines, with Brent and U.S. crude having nearly
halved in value since June. Cheaper oil prices makes palm a less
attractive feedstock option for biodiesel producers.
"People are cautious. The world economy looks very gloomy
and investors are worried about demand - crude is still weak,
we're not sure whether in the coming months biofuel demand will
still be there," said a trader with a foreign commodities firm
in Kuala Lumpur.
"There's no real factor for prices to rally on, but there
are a lot of things to push prices lower."
The benchmark March contract on the Bursa Malaysia
Derivatives Exchange had edged up 0.2 percent to 2,153 ringgit
($620) per tonne by Friday's close, pulling up from an intraday
low of 2,127 ringgit.
Total traded volume stood at 39,350 lots of 25 tonnes, above
the daily average of 35,000 lots.
Technicals were bearish. Palm oil may break support at 2,116
ringgit per tonne and fall further, as it seems to have
completed a rebound triggered by this level, according to
Reuters market analyst Wang Tao.
Despite the small uptick, Malaysian palm prices, which set
the tone for global prices, lost 0.8 percent this week to post
their biggest weekly fall since late November, as volatility in
crude and soy oil markets dragged.
Market players are also turning cautious over warnings of
heavy rains and an "orange stage" alert issued by Malaysia's
meteorological department.
Heavy intermittent rains are expected over the palm-growing
states of Pahang and Johor until Saturday, the department's
website showed. From Sunday to Tuesday, moderate rainfall is
forecast for the two states.
Parts of Malaysia's east coast states of Kelantan and
Teregganu have already been hit by floods, displacing around
26,000 people, according to local media reports.
Flooding in palm estates would hinder harvesting and
transportation of fresh fruit bunches, denting crude palm oil
output.
In competing vegetable oil markets, the most active May
soybean oil contract on the Dalian Commodity Exchange
fell 0.7 percent in late Asian trade, while the U.S. soyoil
contract for January crept up 0.3 percent.
Palm, soy and crude oil prices at 1023 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN5 2160 +14.00 2124 2160 217
MY PALM OIL FEB5 2153 +6.00 2128 2154 5740
MY PALM OIL MAR5 2153 +5.00 2127 2154 20757
CHINA PALM OLEIN MAY5 4912 -14.00 4898 4974 606440
CHINA SOYOIL MAY5 5590 -40.00 5568 5628 274602
CBOT SOY OIL JAN5 31.97 -0.10 31.71 31.98 2721
INDIA PALM OIL DEC4 416.00 -0.10 414.00 416.00 347
INDIA SOYOIL DEC4 573.20 -7.75 568.20 580.30 2275
NYMEX CRUDE JAN5 54.89 +0.78 54.20 55.50 2587
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 = 3.475 Malaysian ringgit)
($1 = 6.2202 Chinese yuan)
($1 = 63.22 Indian rupee)
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