KUALA LUMPUR: Malaysian palm oil futures rose to a more-than-three-week high on Thursday, lifted by hopes that demand might be picking up after a jump in exports, although caution over palm stocks that have swollen past 2 million tonnes kept a lid on gains.
Shipments of Malaysian palm oil products surged about 40
percent in the first 10 days of September compared to the same
period in August, cargo surveyors reported, after the No.2
producer said it would temporarily scrap export duties for the
crude grade.
"The zero export tax move came in and changed sentiment to
supportive," said a trader with a foreign commodities brokerage
in Kuala Lumpur. "We anticipate exports of crude palm oil in
September and October will be much better."
The removal of export taxes for those two months could stoke
demand for crude palm oil (CPO) from key buyers overseas and
keep prices from slipping below the 2,000 ringgit mark, analysts
said.
"We expect the news to have a positive impact on CPO prices
as it should encourage demand from countries that may prefer CPO
against refined palm oil, such as India and China," said Kenanga
Investment Bank analyst Alan Lim.
Market players said aggressive buying in the cash market
also helped push up palm prices in late trade.
The benchmark November contract on the Bursa
Malaysia Derivatives Exchange had inched up 1.9 percent to 2,072
ringgit ($649) per tonne by Thursday's close, after hitting a
Aug. 20 high of 2,073 ringgit.
Total traded volume stood at 39,439 lots of 25 tonnes, above
the average 35,000 lots.
Technicals showed that palm oil was expected to retest
resistance at 2,055 ringgit per tonne, a break above which would
lead to a further gain towards 2,142 ringgit, said Reuters
market analyst Wang Tao.
While the rebound in exports supported prices, which have
slid 22 percent in 2014, a surprise surge in palm oil stocks
curbed gains.
Industry data showed Malaysian palm oil stocks surpassed
market estimates and climbed to 2.05 million tonnes at the end
of August, the highest in more than a year, after favourable
weather boosted production of the tropical oil.
"The higher-than-expected palm oil inventory is negative for
CPO prices as it suggests there is ample supply of edible oils
in the near term, which may cause certain buyers to defer their
purchases," said CIMB analyst Ivy Ng.
Ng added that rising production could drive Malaysian palm
stocks up to 2.36 million tonnes in September and forecast that
prices would trade between 1,900 and 2,200 ringgit this month.
In rival vegetable oil markets, the U.S. soyoil contract for
December rose 0.5 percent in late Asian trade, while the
most active January soybean oil contract on the Dalian
Commodities Exchange shed 0.3 percent.
Investors were jittery ahead of a crop report by the U.S.
Department of Agriculture, which is expected to raise forecasts
for soybean production in the world's top exporter.
In other markets, Brent crude fell to a 17-month low below
$98 a barrel on Thursday, down for the sixth straight session as
worries over ample supply and weak demand outweighed concerns
that conflict in the Middle East could curb oil production.
Palm, soy and crude oil prices at 1013 GMT
Contract Month Last Change Low High Volume
MY PALM OIL SEP4 2075 +26.00 2060 2075 36
MY PALM OIL OCT4 2086 +42.00 2016 2086 2106
MY PALM OIL NOV4 2072 +39.00 2007 2073 18631
CHINA PALM OLEIN JAN5 5160 +22.00 5128 5178 505750
CHINA SOYOIL JAN5 5884 -20.00 5856 5920 458960
CBOT SOY OIL DEC4 31.98 +0.15 31.65 32.02 7103
INDIA SOYOIL SEP4 613.25 +1.80 609.50 613.80 6825
NYMEX CRUDE OCT4 91.10 -0.57 90.92 91.91 23099
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 = 3.192 Malaysian ringgit)
($1 = 6.130 Chinese yuan)
($1 = 60.76 Indian rupees)
- Reuters
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