KUALA LUMPUR: Malaysian palm oil futures edged down on Wednesday to hover around their lowest levels in more than a year, weighed down by projections of bigger-than-expected supplies of rival oilseeds, which could eat into demand for the tropical oil.
The U.S. Department of Agriculture (USDA) estimated on
Tuesday that U.S. soybean stocks would end the 2014/2015
marketing year at 430 million bushels, surpassing market
expectations of 414 million.
Bigger supplies for crushing would weaken soyoil prices and
potentially channel food and fuel demand away from palm.
The USDA forecast comes just after a report from regulator
the Malaysian Palm Oil Board (MPOB) on Monday that showed palm
oil stocks in the No. 2 producer unexpectedly rose to 1.68
million tonnes at the end of July, against trade estimates that
inventories would shrink.
"Both the MPOB and USDA are bearish, and prices have already
factored them in well," said a trader with a commodities
brokerage in Kuala Lumpur.
The benchmark October contract on the Bursa
Malaysia Derivatives Exchange had ended 0.5 percent lower at
2,177 ringgit ($682) per tonne on Wednesday, giving up gains in
the morning session to settle at the lower end of intraday
trade.
Market players said palm oil prices, which have tumbled more
than 18 percent so far in 2014 to hit their lowest in over a
year at 2,162 ringgit on Tuesday, may be stuck in a range until
there is more clarity on demand.
"After a sharp fall, there was some retracement yesterday,
and this morning some follow-through. But there was a bit of
resistance at 2,200 ringgit," said another Malaysia-based palm
trader.
"Unless it can pull above 2,200 ringgit, where there will be
further short-covering, prices will trade in the 2,150-2,200
ringgit range."
Total traded volumes stood at 40,012 lots of 25 tonnes,
above the usual 35,000 lots.
Technicals showed Malaysian palm oil was expected to retest
support at 2,172 ringgit per tonne as it could have more or less
completed a rebound triggered by this level, said Reuters market
analyst Wang Tao.
Production of palm oil in Malaysia and Indonesia, the
world's top growers, is set to gain momentum in coming months,
adding to global oilseed supplies at a time of sluggish demand.
However, the pick-up in output hinges on a potential El Nino
weather pattern, which the Australian Bureau of Meteorology said
is showing renewed signs of development.
Traders will also be watching for export data for the first
half of August, which is due from cargo surveyors on Friday.
Malaysian overseas sales of palm oil products were weak
between August 1-10, falling 20-22 percent compared to the same
period in July as demand from China and Europe lagged.
Shipments to India, however, firmed ahead of a festival
seasion that starts from August.
Palm oil imports to the world's top edible oil buyer rose
nearly 10 percent to 657,750 tonnes in July compared to June,
according to the Solvent Extractors' Association of India (SEA),
raising hopes that demand would continue strong this month.
In other markets, Brent crude oil fell for a fourth straight
day on Wednesday to its lowest in more than a year, dipping
towards $102 a barrel as strong supplies overshadowed fears of
disruptions from violence in OPEC members Iraq and Libya.
In competing vegetable oil markets, the U.S. soyoil contract
for December fell 0.1 percent in late Asian trade, while
the most active January soybean oil contract on the
Dalian Commodities Exchange shed 0.3 percent.
Palm, soy and crude oil prices at 1023 GMT
Contract Month Last Change Low High Volume
MY PALM OIL AUG4 2200 -28.00 2185 2220 7
MY PALM OIL SEP4 2199 -13.00 2187 2223 2929
MY PALM OIL OCT4 2177 -10.00 2163 2201 18442
CHINA PALM OLEIN JAN5 5564 -6.00 5556 5582 263474
CHINA SOYOIL JAN5 6312 -18.00 6310 6348 192688
CBOT SOY OIL DEC4 34.94 -0.04 34.83 35.11 4501
NYMEX CRUDE SEP4 97.38 +0.01 97.06 97.48 15373
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 = 3.192 Malaysian ringgit)
($1 = 6.1544 Chinese yuan)
($1 = 61.27 Indian rupee)
- Reuters
Limited time offer:
Just RM5 per month.
