KUALA LUMPUR: Malaysian palm oil futures rose on Wednesday, fuelled by optimism that robust export demand amid easing palm production in September would help curb a rise in stockpiles in the world's second-largest grower.
The Malaysian Palm Oil Association, a group of planters, estimated that
crude palm oil production fell 12.2 percent between Sept. 1 and Sept. 20,
signalling that the pace of output growth may have lost steam after surging 22
percent to 2.03 million tonnes in August.
On the other hand, demand for Malaysian crude palm oil has jumped this
month, and was 21-26 percent higher in the first 20 days of September compared
with the same period a month earlier. Cargo surveyors will release data for
exports between Sept. 1 and Sept. 25 on Thursday.
"Strong demand at the back of sluggish production will keep the momentum
going," said Lingam Supramaniam, director at Malaysia-based commodities firm
Pelindung Bestari.
"The weaker ringgit and signs of tapering output in October, November and
December, will see prices hit 2,200-2,300 ringgit by the fourth quarter of
2014."
The benchmark December contract on the Bursa Malaysia Derivatives
Exchange ended up 1.4 percent at 2,155 ringgit ($665) per tonne, with prices
rising as high as 2,157 ringgit in late intraday trading.
Total traded volume stood at 41,137 lots of 25 tonnes each, above the usual
35,000.
Technicals had indicated that palm oil's intraday target was 2,060 ringgit,
with the first resistance at 2,150 ringgit and the second at 2,215 ringgit, said
Reuters market analyst Wang Tao.
Another trader in Kuala Lumpur said palm prices could be lifted by round of
technical correction.
"Now the technical play has come into the picture," said the trader, who is
with a foreign commodities brokerage in Kuala Lumpur.
"Prices are now in upward correction mode, so whatever bearish fundamentals,
that have already been priced in, has no impact on prices."
The Malaysian ringgit was trading at 3.248 against the greenback on
Wednesday. A weaker Malaysian currency makes the ringgit-denominated palm
feedstock cheaper for overseas buyers and refiners.
In vegetable oil markets commonly tracked by palm, the U.S. soyoil contract
for December was up 0.9 percent in early Asian trade, while the most
active January soybean oil contract on the Dalian Commodities Exchange
gained 0.6 percent.
Investors are bracing for a record supply of soybeans from the United States
and South America to flood the oilseed market, which could potentially hammer on
edible oil prices.
In Argentina, farmers are expected to plant soy on about 20 million hectares
in the 2014/15 crop year, unchanged from the record high set in the 2013/14
season, Agriculture Secretary Gabriel Delgado told Reuters on Tuesday.
In other markets, oil fell towards $96 a barrel as rising supply from Africa
and Iraq offset rising tension in the Middle East and better-than-expected data
in China.
Palm, soy and crude oil prices at 1017 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 2175 +23.00 2149 2180 596
MY PALM OIL NOV4 2159 +31.00 2127 2161 4722
MY PALM OIL DEC4 2155 +29.00 2123 2157 20940
CHINA PALM OLEIN JAN5 5140 +56.00 5124 5162 531248
CHINA SOYOIL JAN5 5868 +32.00 5842 5894 464050
CBOT SOY OIL DEC4 32.64 +0.40 32.27 32.71 5962
INDIA PALM OIL SEP4 465.70 +0.40 463.10 467.10 224
INDIA SOYOIL OCT4 609.85 +6.90 601.00 611.00 54355
NYMEX CRUDE NOV4 91.63 +0.07 91.42 91.92 15858
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 = 3.24 Malaysian ringgit)
($1 = 6.1346 Chinese yuan)
($1 = 60.94 Indian rupees)
- Reuters
Limited time offer:
Just RM5 per month.
