"Lower output in January and short covering are the catalysts behind firmer prices today," said a trader based in Kuala Lumpur. "As February is a short month with long Chinese New Year holidays, major selloffs will be muted temporarily."
KUALA LUMPUR: Malaysian palm oil futures rose for a second session and hit a one-week high on Tuesday, buoyed by expectations of lower output and as traders covered their short positions ahead of the Lunar New Year holidays, but gains were restricted as crude oil prices resumed their descent.
Benchmark palm oil prices have been under pressure and hit a
one-week low earlier this month in the absence of an expected
pick up in demand from China before the new year celebrations in
February. A plunge in crude oil futures to 12-year lows has also
made the tropical oil less attractive for blending into biofuel.
"Lower output in January and short covering are the
catalysts behind firmer prices today," said a trader based in
Kuala Lumpur. "As February is a short month with long Chinese
New Year holidays, major selloffs will be muted temporarily."
The palm oil contract for April on the Bursa
Malaysia Derivatives Exchange gained 0.6 percent to 2,475
ringgit ($577.12) per tonne at the close of trade. It earlier
reached 2,479 ringgit, its highest since Jan. 18.
Traded volume stood at 44,679 lots of 25 tonnes each. The
market will be closed on Feb. 1 for a public holiday in Kuala
Lumpur, and over Feb. 8-9 for the Lunar New Year holidays.
Production from Malaysia, the world's No.2 palm oil producer
after Indonesia, is expected to decline in the coming months, in
line with seasonal trends and as the impact of a crop-damaging
dry weather linked to an El Nino weather pattern kicks in.
Palm oil still targets a resistance at 2,495 ringgit per
tonne, as suggested by its wave pattern and a Fibonacci
projection analysis, according to Wang Tao, a Reuters market
analyst for commodities and energy technicals.
However, weak exports will likely keep a lid on gains.
Data from cargo surveyors shows monthly exports of Malaysian
palm oil products have dropped around 8 percent so far in
January.
A slide in crude oil prices to below $30 per
barrel, after a brief rally towards the end of last week, will
also drag on palm oil futures.
The U.S. March soyoil contract was slightly down 0.1
percent, while the May soybean oil contract on the
Dalian Commodity Exchange rose 0.1 percent.
Palm, soy and crude oil prices at 1012 GMT
Contract Month Last Change Low High Volume
MY PALM OIL FEB6 2387 +5.00 2380 2398 244
MY PALM OIL MAR6 2448 +13.00 2429 2452 5653
MY PALM OIL APR6 2475 +15.00 2452 2479 21123
CHINA PALM OLEIN MAY6 4692 +36.00 4638 4696 1030528
CHINA SOYOIL MAY6 5608 +4.00 5568 5638 656944
CBOT SOY OIL MAR6 30.38 -0.60 30.21 30.51 3322
INDIA PALM OIL JAN6 428.90 -0.60 428.00 430.80 446
INDIA SOYOIL FEB6 608.65 -4.00 608.60 613.80 39590
NYMEX CRUDE MAR6 30.08 -0.26 29.25 30.33 76956
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 = 4.2885 ringgit)
($1 = 67.8600 Indian rupees)
($1 = 6.5815 Chinese yuan) - Reuters
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