KUALA LUMPUR: Malaysian palm oil futures fell on Wednesday after a rally that had lifted the contract to three-month highs, with prices tracking a correction in soyoil markets and with the ringgit clawing back gains.
Palm jumped over 10 percent from a trough of 2,121 ringgit
reached on May 25, supported by a drop in the ringgit to
seven-week lows, and a rally in rival soy markets that was
fuelled by increased biodiesel targets set by the U.S.
Environmental Protection Agency (EPA).
After climbing nearly 9 percent in the last three sessions
to as high as 34.94 U.S. cents a pound, the U.S. July soyoil
contract was down 0.3 percent at 34.07 cents by 1020 GMT.
The most active September soybean oil contract on the
Dalian Commodity Exchange fell 1.4 percent.
"There's a correction on soybean oil and strengthening of
the ringgit, so palm took the opportunity to have some technical
correction," said a trader with a foreign commodities brokerage,
but added that prices could be supported at 2,280 ringgit.
"Since we broke 2,300 ringgit, a lot of people are taking
the chance to sell," the Kuala Lumpur-based trader said. "Today
is the first day of correction, we will need to see how far it
can go before the market establishes a new trading range."
The August palm oil contract on the Bursa Malaysia
Derivatives exchange had lost 0.8 percent to 2,296 ringgit
($623.32) a tonne by Wednesday's close.
Total traded volume stood at 37,897 lots of 25 tonnes each,
above the average 35,000 lots.
The Malaysian ringgit advanced for the first time
in over a week on Wednesday, to trade at 3.6835 against the U.S.
dollar.
Despite the stutter in palm's rally, analysts say the U.S.
EPA's move to increase the amount of biofuels to be mixed into
motor fuel for the three years to 2016 would see higher usage
and selling prices of rival edible oils - soyoil, rapeseed and
corn oil - which will underpin palm.
"Our analysis suggests that the latest proposal could boost
U.S. edible oil usage by between 647,000 tonnes to 1.4 million
tonnes in 2015," Ivy Ng, regional head of plantations research
at CIMB Investment Bank, said in a note.
"The increment could offset the weaker Indonesia biodiesel
demand and boost the near-term crude palm oil price."
In other markets, oil prices fell on Wednesday as the dollar
strengthened and as oversupply weighed on markets ahead of a key
meeting of OPEC oil producers.
Palm, soy and crude oil prices at 1022 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUN5 0 +0.00 0 0 0
MY PALM OIL JUL5 2293 -21.00 2278 2310 1822
MY PALM OIL AUG5 2296 -19.00 2276 2311 21626
CHINA PALM OLEIN SEP5 5138 -84.00 5122 5248 828870
CHINA SOYOIL SEP5 5832 -82.00 5828 5936 762444
CBOT SOY OIL JUL5 34.07 -2.90 33.96 34.30 9755
INDIA PALM OIL JUN5 460.50 -2.90 459.30 462.80 1351
INDIA SOYOIL JUN5 619.95 -4.55 618.60 624.80 21985
NYMEX CRUDE JUL5 59.87 -1.39 59.69 61.04 35129
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 = 3.6835 ringgit)
($1 = 6.1976 Chinese yuan)
($1 = 63.96 Indian rupees)- Reuters
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