KUALA LUMPUR: Malaysian palm oil futures edged lower in thin trade on Friday, as investors
continued to book profits from big gains earlier this week, with weakness in overseas soy markets and a firm ringgit also dragging.
Benchmark prices however notched a 0.8 percent gain this
week, their biggest rise since early March, lifted by
anticipation of a recovery in food and fuel demand for the
tropical oil.
"Today there's a continuation of yesterday's profit-taking
but without any serious volume involved," said a trader with a
foreign commodities brokerage.
"Given that the external market is weakening and our ringgit
is strengthening slightly, most likely the palm market will
continue its correction to test 2,600 ringgit."
By Friday's close, the benchmark July contract on
the Bursa Malaysia Derivatives Exchange had edged down 0.5
percent to 2,635 ringgit ($814) per tonne, with prices locked
between 2,623-2,653 ringgit.
Total traded volumes were thin at 18,509 lots of 25 tonnes,
about half the average 35,000 lots.
Most currency and equity markets are closed for the Good
Friday holiday and will reopen for trading next week.
Market players are watching for Malaysian export data for
the April 1-20 period, which will be released by cargo surveyors
on Monday, to gauge global demand for the tropical oil.
Palm oil demand is expected to strengthen in April onwards
as buyers in India, Pakistan and the Middle East restock ahead
of the Muslim holy month of Ramadan in late June, followed by
the Eid al-Fitr celebrations in July.
"Demand will be reflected by the export figures next Monday.
From this period onwards exports should pick up, given that
March exports were so weak and also because of Ramadan demand,"
the trader added.
A strong Malaysian ringgit, however, could cap export sales
as it makes the ringgit-denominated feedstock more expensive for
overseas buyers. The ringgit was trading at 3.2390 against the
U.S. dollar late Friday.
Malaysia's overseas sales of palm oil products fell 8
percent to 1.24 million tonnes in March compared to a month ago,
missing market estimates for 1.30 million tonnes of shipments.
Talks of Chinese commodity buyers defaulting on soybean
cargoes also kept traders wary that the world's second-largest
edible oil buyer would also slow purchases of other vegetable
oils.
China's top soy buyer Shandong Sunrise Group told Reuters
that Chinese buyers may default on a further 1.2 million tonnes
of soybeans worth about $900 million being shipped from the
United States and South America, to avoid incurring huge losses
in a depressed local market.
The most active September soybean oil contract on
the Dalian Commodities Exchange fell 0.5 percent in late Asian
trade.
Palm, soy and crude oil prices at 1006 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAY4 2690 -22.00 2685 2714 271
MY PALM OIL JUN4 2650 -11.00 2635 2665 3667
MY PALM OIL JUL4 2635 -12.00 2623 2653 11203
CHINA PALM OLEIN SEP4 6190 -54.00 6164 6208 322750
CHINA SOYOIL SEP4 7038 -34.00 7008 7058 365526
CBOT SOY OIL JUL4 43.59 -0.34 43.44 43.94 50892
NYMEX CRUDE MAY4 104.30 +0.54 103.54 104.78 179888
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
($1 = 3.239 Malaysian ringgit)
($1 = 6.2242 Chinese yuan)
- Reuters
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