KUALA LUMPUR: Malaysian palm oil futures inched lower on Wednesday, tracking losses in crude and vegetable oil markets overseas with investors bracing for forecasts of bigger global oilseed supplies, although a surge in palm export curbed losses.
Cargo surveyor Intertek Testing Services reported that
exports of Malaysian palm oil products during Sept. 1-10 jumped
40.6 percent to 487,955 tonnes compared to the same period a
month ago, with shipments of the crude grade more than doubling.
The rise in exports comes after Malaysia said it will scrap
export duty for crude palm oil for September and October in a
move to encourage overseas sales from the No.2 producer.
But the increase in export demand might not be enough to
immediately turn around prices, which have slumped 25 percent so
far in 2014, traders said.
"The problem is that soybean oil and Dalian palm olein are
still trading at the low side. So, how is palm going to go up?
It (the export rise) can only cushion the market temporarily,"
said a trader with a foreign commodities brokerage in Kuala
Lumpur.
By Wednesday's close, the benchmark November contract
on the Bursa Malaysia Derivatives Exchange had slipped
0.1 percent to 2,032 ringgit ($635) per tonne, after falling to
1,997 ringgit in early trade. Total traded volume stood at
47,010 lots of 25 tonnes, above the daily average of 35,000
lots.
Data from the Malaysian Palm Oil Board, released after the
midday break, showed that end-August palm oil stocks in the No.2
producer surged 22 percent to 2.05 million tonnes to their
highest since March 2013, amid softer demand.
In overseas markets commonly tracked by palm, the U.S.
soyoil contract for December inched down 0.09 percent in
Asian trade, while the most active January soybean oil contract
on the Dalian Commodities Exchange shed 1.93 percent.
Chicago Board of Trade November soybeans slid to a
contract low of $9.90-3/4 per bushel on Wednesday as
near-perfect weather in the U.S. Midwest raised expectations the
government will further increase production estimates.
"It's not only palm - most of the agricultural commodities
are very depressed. Palm oil was not spared," the Kuala
Lumpur-based trader added.
RHB Research Institute cut its forecast for 2014 average
crude palm oil prices to 2,400 ringgit per tonne from 2,700
ringgit previously, but said palm prices could strengthen in the
fourth quarter of the year.
"We believe palm prices are weeks away from a bottom and
should strengthen in 4Q as well as in 2015," RHB said in
research note.
"That said, the current low levels will pull down the
full-year average, hence the cut in our assumptions," RHB added.
Forecasts for average 2015 prices were cut to 2,500 ringgit from
2,900 ringgit.
Societe Generale de Surveillance, another cargo surveyor,
will release August export data later on Wednesday.
In other markets, Brent crude dropped to a 16-month low
under $99 per barrel on Wednesday, stretching its losses into a
fifth session amid continued worries about rising supplies and
weak global demand.
Palm, soy and crude oil prices at 1001 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 2040 -10.00 2023 2040 14
MY PALM OIL OCT4 2045 +0.00 2012 2045 1896
MY PALM OIL NOV4 2032 -2.00 1997 2035 19960
CHINA PALM OLEIN JAN5 5130 -82.00 5090 5196 731582
CHINA SOYOIL JAN5 5884 -116.00 5872 5944 509176
CBOT SOY OIL DEC4 31.75 +0.03 31.52 31.82 7620
NYMEX CRUDE OCT4 93.01 +0.26 92.50 93.03 21702
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 = 3.20 Malaysian ringgit)
($1 = 6.137 Chinese yuan)
($1 = 60.81 Indian rupee)- Reuters
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