KUALA LUMPUR: Malaysian palm oil futures fell in choppy trade on Monday, dragged lower as oil prices slid to fresh 5-1/2-year lows, although losses in the ringgit and concerns over floods curbing palm supply propped up the market.
Oil prices dropped to fresh 5-1/2-year lows on Monday as
worries about a surplus of global supplies and lacklustre demand
dragged on oil markets.
Cheaper oil prices dent energy sector demand for palm as a
biodiesel feedstock.
However, they have also pulled down the Malaysian ringgit
against the U.S. dollar, making ringgit-priced palm oil
more attractive for overseas buyers and refiners. The ringgit,
Asia's weakest currency in 2014, fell 0.6 percent to 3.5350 on
Monday.
"It's a very uncertain market," said a trader with a foreign
commodities brokerage in Kuala Lumpur.
"We have good and bad factors in the market. Externally the
market is weak - Dalian and crude oil are coming down. But
there's also a weak ringgit, followed by persisting floods."
The benchmark March contract had dropped 0.9
percent to 2,262 ringgit ($640) per tonne by Monday's close, at
the lower end of the day's trading range of 2,262 and 2,297
ringgit.
Total traded volume stood at 32,944 lots of 25 tonnes, below
the usual 35,000 lots.
Palm oil fell 15 percent in 2014, its biggest decline since
2012, but losses were less steep than initially expected due to
monsoon floods which submerged parts of the country in what
local authorities say is the worst flooding in decades.
The benchmark contract ended the year at 2,266 ringgit,
above an October Reuters poll that had forecast 2,161 ringgit.
The hardest-hit states of Kelantan, Terengganu, Pahang and
Perak together account for about 30 percent of Malaysia's crude
palm oil supply.
Analysts say floods will take a toll on palm oil output in
Malaysia, the world's second-largest grower, and eat into
stockpiles.
"Malaysian palm oil stocks are likely to fall further in
January due to the seasonal drop in output, as well as the
ongoing floods, while exports are likely to be relatively stable
in view of the upcoming Chinese New Year festivities," said CIMB
Investment Bank analyst Ivy Ng in a research note.
In vegetable oil markets, the most active May soybean oil
contract on the Dalian Commodity Exchange fell 1.4
percent in late Asian trade, while the U.S. soyoil contract for
March rose 0.4 percent.
Palm, soy and crude oil prices at 1004 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JAN5 2293 -22.00 2293 2320 265
MY PALM OIL FEB5 2284 -18.00 2283 2314 1201
MY PALM OIL MAR5 2262 -21.00 2262 2297 19631
CHINA PALM OLEIN MAY5 5006 -68.00 4982 5052 240460
CHINA SOYOIL MAY5 5650 -78.00 5610 5690 267922
CBOT SOY OIL MAR5 32.23 -1.10 32.05 32.36 4780
INDIA PALM OIL JAN5 460.60 -1.10 460.30 464.00 491
INDIA SOYOIL JAN5 644.55 +4.15 642.80 646.00 24175
NYMEX CRUDE FEB5 52.00 -0.69 51.40 52.73 40637
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 = 3.532 Malaysian ringgit)
($1 = 6.2200 Chinese yuan)
($1 = 63.30 Indian rupee)- Reuters
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