Malaysian palm oil price falls on advancing ringgit; demand woes fester

KUALA LUMPUR: Malaysian palm oil futures inched down 1.4 percent on Thursday, reversing gains clocked in the previous session to fall six out of seven days, as the ringgit advanced and investors fretted about waning demand for the tropical oil. 
    Traders say weaker soyoil prices have narrowed palm's discount to the rival edible oil,
prompting price-sensitive buyers to switch to soy instead. Palm olein's discount
to soyoil has shrunk to around $41 from $128 at the start of 2015.
    "Right now there's less demand, while production is picking up," said a trader with a
commodities brokerage in Singapore. 
    "That's the reason the market cannot hold. Even if you want to push it up, how much can you
push? It has to be supported by demand."        
    After recording its worst export volumes since 2007 in February, Malaysian overseas sales of
palm oil products continued to decline this month, dropping between 12 and 19 percent in March
1-10 versus a month ago, cargo surveyors said.       
    The benchmark May contract on the Bursa Malaysia Derivatives Exchange lost 1.4
percent to 2,243 ringgit ($608) a tonne, cutting short a rally on Wednesday that had lifted
prices to as high as 2,280 ringgit. 
    "Rallies are more of short-covering versus genuine buying," a second palm trader said in
Kuala Lumpur. 
    Total traded volume stood at 38,166 lots of 25 tonnes, just above the average 35,000 lots.   
   
    The Malaysian ringgit meanwhile strengthened to 3.6890 per dollar on Thursday, after
sliding to fresh six-year lows of 3.7170 in the previous session. 
    On the technical front, palm oil may fall to a support at 2,218 ringgit per tonne, as it
could have completed a rebound triggered by this level, Reuters market analyst Wang Tao said.
 
                
    Palm oil traders are keeping watch on a three-day strike in Argentina that began on
Wednesday. Argentine farmers, including three of the four largest farming groups in the top
soymeal exporter, will halt crop sales aimed at reducing the delivery of grains to port.
    
    The most active May soybean oil contract on the Dalian Commodity Exchange rose 0.2
percent in late Asian trade, while the U.S. soyoil contract for May was down 0.1 percent. 
    In other markets, Brent oil futures rose above $58 a barrel on Thursday as the dollar
weakened and speculators covered their positions ahead of the April contract's expiry, while a
build in U.S. crude stocks capped prices.   
  Palm, soy and crude oil prices at 1019 GMT
                                                                                                 
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAR5       0    +0.00       0       0       0
  MY PALM OIL      APR5    2239   -39.00    2236    2273    3449
  MY PALM OIL      MAY5    2243   -33.00    2234    2271   23793
  CHINA PALM OLEIN SEP5    4748   +22.00    4732    4776  316596
  CHINA SOYOIL     SEP5    5474   +12.00    5450    5500  386024
  CBOT SOY OIL     MAY5   31.08    -2.50   31.00   31.20    3878
  INDIA PALM OIL   MAR5  445.80    -2.50  445.00  447.00     460
  INDIA SOYOIL     APR5  574.85    -1.75  574.00  576.80   11510
  NYMEX CRUDE      APR5   48.53    +0.36   48.03   48.70   30697
                                                                                                 
  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 = 3.6890 Malaysian ringgit)    
($1 = 6.2624 Chinese yuan)
($1 = 62.57 Indian rupee)- Reuters