KUALA LUMPUR: Malaysian palm oil futures fell to their lowest in nearly a week on Tuesday, following losses in U.S. and Chinese soyoil markets, while plunging crude prices stoked concerns about demand for palm from biofuel producers.Soy markets took a beating late Monday after U.S. Department of Agriculture
data revealed that the record U.S. soybean harvest in 2014 was even bigger than
expected, lifting domestic supplies to eight-year highs, ahead of an anticipated
bumper harvest from South America.
Larger supplies of soybeans for crushing could weaken prices of soyoil, a
rival vegetable oil that typically trades at a premium to palm. Lower soyoil
prices may prompt buyers to shift away from palm.
The U.S. soyoil contract for March fell as much as 3.2 percent in the
overnight Monday session, and was trading at 32.88 cents a pound late Tuesday.
The most active May soybean oil contract on the Dalian Commodity
Exchange dropped 1.7 percent.
"Palm is weak because competing oils have become cheaper," said a
Singapore-based commodities dealer.
The benchmark March contract had eased 0.4 percent to 2,354 ringgit
($655) per tonne by Tuesday's close, after dropping to its lowest since Jan. 7
at 2,324 ringgit.
Total traded volume stood at 57,988 lots of 25 tonnes, above the average
Palm oil stocks in Malaysia, the world's second-largest grower, tightened to
their smallest in five months at the end of December, according to Malaysia's
Analysts say monsoon flooding alongside seasonally weaker production may eat
further into January inventories.
"Barring any substantial pickup in imports, CPO stocks are likely to drop
below 2 million tonnes by the end of January 2015," TA Securities said in a note
But the rout in crude oil prices, with Brent and U.S. crude at their weakest
since April 2009, fuelled worries over palm's biodiesel demand.
"We remain concerned that palm oil exports may stay weak due to lower
biodiesel demand as palm oil prices are now trading at a sharp premium over
crude oil prices, making it uneconomical to convert CPO into biodiesel," said
CIMB analyst Ivg Ng.
Brent and U.S. WTI crude oil prices fell to their lowest levels in almost
six years on Tuesday as a big OPEC producer stood by the group's decision not to
cut output to tackle a glut in the market.
Palm, soy and crude oil prices at 1020 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN5 2380 +5.00 2349 2380 33
MY PALM OIL FEB5 2375 +1.00 2335 2392 1816
MY PALM OIL MAR5 2354 -9.00 2324 2375 31287
CHINA PALM OLEIN MAY5 4982 -78.00 4972 5058 299966
CHINA SOYOIL MAY5 5646 -100.00 5636 5738 288724
CBOT SOY OIL MAR5 32.88 -1.00 32.65 32.92 7574
INDIA PALM OIL JAN5 460.60 -1.00 458.80 462.60 516
INDIA SOYOIL JAN5 665.00 +0.10 663.00 668.90 8420
NYMEX CRUDE FEB5 44.74 -1.33 44.21 45.91 64705
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 = 3.5920 Malaysian ringgit)
($1 = 6.1983 Chinese yuan)
($1 = 62.15 Indian rupee)