Malaysian palm oil price ends 3-day winning streak as soyoil markets drop

KUALA LUMPUR: Malaysian palm oil futures fell on Thursday as comparative soy markets weakened and investors fretted about a build-up in stocks in the world's No.2 producer, cutting short a rally that had lifted prices up 6 percent in the past week.

    Benchmark prices shot up from their weakest point of 2,070 ringgit on April 29 to a top of 2,200 ringgit on Wednesday, tracking big gains in overseas soyoil markets and as investors covered short positions after Indonesia approved a palm export levy to fund its biodiesel policies. 

    But prospects of swelling inventories in Malaysia, as well as investors booking profits from the rally, reined in gains, market players said.

    "The preliminary data shows a much higher build-up in end-stocks. Market will see lots of position squaring ahead of MPOB on Monday," said Lingam Supramaniam, director at Malaysian-based commodities firm Pelindung Bestari.

    The benchmark July contract on the Bursa Malaysia Derivatives exchange had edged down 0.5 percent to 2,173 ringgit ($604.87) a tonne by Thursday's close. Total traded volume stood at 29,058 lots of 25 tonnes each, below the usual 35,000 lots.    

    Industry regulator the Malaysian Palm Oil Board will release official data on the country's April palm stocks on May 11. A Reuters poll estimates end-stocks rose to a five-month high of 2.13 million tonnes, with crude palm output climbing 11.5 percent. 


    Indonesia has approved a regulation requiring exporters to pay a levy of $50 per tonne of crude palm oil and $30 for processed palm oil product shipments, which is expected to take effect by the third week of May. 

    Analysts say the new tax may adversely impact Indonesian and Malaysian companies that are solely in upstream operations in the short term, but will be overall supportive of palm prices. 

    "We agree with the consensus view that this is a short term pain, but could potentially boost biodiesel consumption and consequently, CPO price, in the long term," TA Securities said in a note on Thursday. 

    The U.S. July soyoil contract was down 0.1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange fell 0.7 percent.    

    Brent crude oil headed up towards 2015 highs above $68 a barrel on Thursday after official data showed the first drawdown in U.S. crude inventories since January, evidence the market there is balancing after months of heavy oversupply.

  Palm, soy and crude oil prices at 1010 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAY5    2161    -5.00    2152    2163      93
  MY PALM OIL      JUN5    2177   -12.00    2169    2184    2518
  MY PALM OIL      JUL5    2173   -10.00    2161    2179   15702
  CHINA PALM OLEIN SEP5    5108   -18.00    5072    5168  948898
  CHINA SOYOIL     SEP5    5890   -40.00    5860    5958 1119022
  CBOT SOY OIL     JUL5   32.88    +4.00   32.69   33.03    5086
  INDIA PALM OIL   MAY5  447.50    +4.00  444.20  447.90     983
  INDIA SOYOIL     JUN5  598.35    +5.15  592.30  598.80   36350
  NYMEX CRUDE      JUN5   61.04    +0.11   60.26   61.31   29314
  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 = 3.5925 Malaysian ringgit)
($1 = 6.2069 Chinese yuan)
($1 = 64.19 Indian rupees)- Reuters
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