KUALA LUMPUR: Malaysian palm oil futures hit a near two-month low on Wednesday as worries that rising vegetable oil supplies may outstrip global demand curbed buying
sentiment and prompted some investors to liquidate positions.
Prices were also pressured by continued weakness in the U.S.
and China soy markets and extended losses into a fifth straight
day. Cheaper soy oil narrows palm's discount to the rival oil,
potentially channelling some food and fuel demand away.
A Reuters poll of planters and traders showed Malaysian palm
oil stocks in December likely eased for the first time in six
months after monsoon rains dented production, but weaker export
demand stemmed the fall and kept inventories elevated.
"Stocks are still relatively high everywhere, even in
Indonesia. The market needs some demand appearing before it can
climb," said a trader with a foreign commodities brokerage.
"That's the reason why investors are liquidating their
positions. They might be trying to break the 2,500 ringgit level
now," the Malaysia-based trader added.
The benchmark March contract on the Bursa Malaysia
Derivatives Exchange hit a low of 2,530 ringgit in late trade on
Wednesday, the lowest since Nov. 12. Prices then settled at
2,548 ringgit ($779) per tonne by the day's close, a 0.5 percent
drop from the previous session.
Total traded volume stood at 47,368 lots of 25 tonnes, much
higher than the usual 35,000 lots.
Technicals showed Malaysian palm oil may fall more to 2,520
ringgit per tonne, after a moderate rebound to 2,577 ringgit,
Reuters market analyst Wang Tao said.
Industry regulator Malaysia's Palm Oil Board (MPOB) will
release official data on stocks, exports and output in the
world's No.2 producer on Friday.
"Palm prices could continue to tread water as traders await
Friday's MPOB and USDA reports," said a trader with a local
commodities brokerage.
"Prices are likely to grind lower through the first quarter
of 2014 with forecasts for bigger crops limiting buying
enthusiasm," the trader added.
Chicago soybeans edged lower on Wednesday on expectations
the U.S. Department of Agriculture will raise its forecast for
global inventories later this week. Analysts said there is
additional pressure on soybeans with expectations of bumper
production in Brazil and Argentina.
In competing vegetable oil markets, the U.S. soyoil contract
for March edged down 0.6 percent in late Asian trade,
while the most active May soybean oil contract on the
Dalian Commodities Exchange lost 0.4 percent.
Palm, soy and crude oil prices at 1002 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2520 -10.00 2493 2524 473
MY PALM OIL FEB4 2531 -11.00 2512 2543 6336
MY PALM OIL MAR4 2548 -13.00 2530 2564 21202
CHINA PALM OLEIN MAY4 5786 -158.00 5776 5930 899106
CHINA SOYOIL MAY4 6608 -24.00 6574 6628 693480
CBOT SOY OIL MAR4 37.69 -0.24 37.68 37.94 4978
NYMEX CRUDE FEB4 93.78 +0.11 93.70 94.18 8947
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
Crude in U.S. dollars per barrel- Reuters
Win a prize this Mother's Day by subscribing to our annual plan now! T&C applies.
