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VEGOILS-Palm slips to 2-wk low on oversupply fears; investors gear up for 2014 trade
January 6, 2014 / 10:27 AM / 4 years ago

VEGOILS-Palm slips to 2-wk low on oversupply fears; investors gear up for 2014 trade

(Updates prices)
    * Prices fall to 2,588 ringgit in late trade, lowest since
Dec 23
    * Indonesia, Malaysia palm output seen growing further this
    * Market players take up positions for 2014 -trader

    By Anuradha Raghu
    KUALA LUMPUR, Jan 6 (Reuters) - Malaysian palm oil futures
slipped to a two-week low on Monday as forecasts of bumper
supplies from the world's top palm producers continued to weigh
on investor sentiment, while weak competing overseas markets
also pressured prices.
    Indonesia and Malaysia -- which together account for nearly
all of the world's palm oil supply -- expect their palm
production to climb in 2014, fanning fears that their supply may
outstrip food and fuel demand.
    Indonesia said its 2013 palm oil output likely grew to 24.4
million tonnes and could rise further to 28 million tonnes in
2014, while No. 2 producer Malaysia expects to hit a record 19.4
million tonnes in 2013 and inch up to 19.5 million tonnes this
    Despite the forecasts, traders said prices would likely
balance out in the coming weeks after market players are done
taking positions for the year ahead. 
    "It's the first day of 'real' trading. For a lot of traders,
it's about starting up their positions again after closing books
in 2013," said a trader with a foreign commodities brokerage in
    "There's some manoeuvring around -- the first few days is
not a good indication of where the market is going. We have to
let things settle down first and let everybody get into the
groove," the trader added.    
   The benchmark March contract on the Bursa Malaysia
Derivatives Exchange had dropped 1.3 percent to 2,606 ringgit
($792) per tonne by Monday's close. Prices earlier hit 2,588
ringgit, the lowest level since Dec. 23. 
    Total traded volume stood at 47,264 lots of 25 tonnes, much
higher than the usual 35,000 lots.
    Prospects of higher production of competing oilseeds have
dragged on U.S. and China soy markets tracked by palm oil.
Larger soybean crops would mean more volumes to be crushed into
soyoil, adding to global stockpiles. 
    The U.S. soyoil contract for March fell 0.6 percent
in late Asian trade on Monday. The most active May soybean oil
contract on the Dalian Commodities Exchange dropped 2.2
    In other markets, Brent crude oil rose above $107 a barrel
on Monday, rebounding after its biggest weekly fall in six
months on news of the restart of a key Libyan oilfield.   
  Palm, soy and crude oil prices at 1012 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN4    2555   -51.00    2555    2575     308
  MY PALM OIL      FEB4    2593   -37.00    2574    2613    4664
  MY PALM OIL      MAR4    2606   -34.00    2588    2629   21341
  CHINA PALM OLEIN MAY4    5976  -102.00    5958    6062  611684
  CHINA SOYOIL     MAY4    6696  -148.00    6692    6810  601708
  CBOT SOY OIL     MAR4   38.36    -0.24   38.36   38.68    2915
  NYMEX CRUDE      FEB4   94.47    +0.51   93.91   94.50   11960
  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
  Crude in U.S. dollars per barrel
 ($1=3.29 Malaysian ringgit)

 (Editing by Sunil Nair and Tom Hogue)

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