Malaysian palm oil up for third day, crude oil fall caps gains

KUALA LUMPUR: Malaysian palm oil futures stretched their winning streak into a third day on Wednesday, as the ringgit fell and as investors expected output to drop this month, although a fall in crude oil prices hampered gains.

    Planters and traders said palm oil output in the world's second biggest producer Malaysia may ease in October as wet
weather delays harvesting and crimps oil extraction rates from fresh fruit, indicating that production growth could have
already peaked in August.   
    "The market is drudging along with mixed sentiments. The bullish factors are the weaker ringgit, lower output, and
weather vagaries in November and December," said a trader with a local commodities brokerage in Malaysia. 
    But worries of bigger competition from the huge U.S. and South American soybean crop alongside "anaemic" food and
fuel demand during the northern hemisphere winter weighed on the tropical oil.
    "With these factors, the market will remain sideways until more is known about MPOB's data," the trader added.     
    The benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged up 0.8 percent to
2,197 ringgit ($671) per tonne by the day's close. 
    The Malaysian ringgit slipped on Wednesday as traders covered short positions in the greeback, and was
trading at 3.2715 per U.S. dollar by 1022 GMT, making the ringgit-priced palm feedstock cheaper for international
    Total traded volume stood at 45,039 lots of 25 tonnes each, higher than the average 35,000 lots. 
    Technicals showed palm oil is expected to test resistance at 2,224 ringgit per tonne, with a good chance of breaking
above this level and rising more to 2,262 ringgit, said Reuters market analyst Wang Tao.       
    Brent crude oil dipped below $91 a barrel on Wednesday to its lowest since June 2012 as lower economic growth
forecasts raised new concerns about global oil demand at a time of abundant supply.   
    Lower crude prices take some fuel demand from palm as it makes the tropical oil a less attractive option for
biodiesel feedstock. 
    "Palm oil did bounce up partly because it was so cheap as a fuel, but crude oil is drifting down it seems. In the
background you cannot forget that this is helping to set the base level for the palm oil price," James Fry, chairman of
commodities consultancy LMC International told Reuters on the sidelines of a oilseeds conference in Barcelona on
    "If I was in the palm, rapeseed or sun market, every morning I would wake up and look at the Brent crude price and
only then start worrying about supply and demand," he added.
    Official data on stocks, output and exports for end-September will be released by industry regulator the Malaysian
Palm Oil Board (MPOB) on Friday. 
    A Reuters poll had showed palm oil stocks in Malaysia expected to hold at 2.05 million tonnes at end-September, as a
removal of export taxes failed to boost shipments as much as initially expected. 
    The survey estimated that crude palm oil production in September fell 8 percent to 1.87 million tonnes, weakening
after August's surge of 22 percent to 2.03 million tonnes. 
    Palm oil output may continue to fall in October due to wet weather, industry players said. 
    The Malaysian Meteorological Department said the current "inter-monsoon season", marked by frequent thunderstorms in
the afternoon, will likely carry on until early or mid-November before the wetter northeast monsoon unfurls. 
    Palm output typically drops in the wet season towards the end of the year as heavy rains and floods complicate
harvesting and transportation of fruit to mills.    
    The U.S. soyoil contract for December shed 0.3 percent in late Asian trade. The most active January soybean
oil contract on the Dalian Commodities Exchange was nearly flat after reopening from the one-week National Day
  Palm, soy and crude oil prices at 1023 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT4    2220   +18.00    2220    2225      40
  MY PALM OIL      NOV4    2213   +18.00    2193    2223    2136
  MY PALM OIL      DEC4    2197   +17.00    2178    2209   23649
  CHINA PALM OLEIN JAN5    5238   +16.00    5214    5270  211470
  CHINA SOYOIL     JAN5    5922    +2.00    5910    5958  253466
  CBOT SOY OIL     DEC4   33.04    -2.70   32.91   33.27    6281
  INDIA PALM OIL   OCT4  457.30    -2.70  455.50  461.00     511
  INDIA SOYOIL     OCT4  607.45    -0.05  606.00  608.90   15025
  NYMEX CRUDE      NOV4   87.90    -0.95   87.39   88.63   36979
  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 = 3.2715 Malaysian ringgit)
 ($1 = 6.1390 Chinese yuan)
 ($1 = 61.39 Indian rupees)- Reuters
Article type: metered
User Type: anonymous web
User Status:
Campaign ID: 1
Cxense type: free
User access status: 3
Join our Telegram channel to get our Evening Alerts and breaking news highlights

palm oil , oil palm , commodities , market , markets , plantations


Next In Business News

RHB group exits asset management business in Indonesia
DNeX completes Silterra acquisition
Serba Dinamik nominates Nexia as new external auditor
Strong demand for handformers lifts ES Ceramics' revenue and profit
KLCI falls 10.91 points as regional markets slip
The path to net zero should be an integrated initiative
RAM: No credit concerns due to Edra Energy's delay in completing power plant
Gross fixed capital formation shrank 14.5% to RM281.1b
China shares tumble on regulatory clampdown; education firms selloff heavily
Oil falls US$1/bbl as coronavirus, floods threaten demand

Stories You'll Enjoy