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VEGOILS-Palm falls to over 7-month low, soy markets drag
May 30, 2014 / 6:57 AM / 3 years ago

VEGOILS-Palm falls to over 7-month low, soy markets drag

(Updates prices)
    * May prices record biggest monthly loss since Sept 2012
    * Palm oil to drop to 2,422 ringgit -technicals
    * Palm market dragged by lacklustre U.S., China soyoil
markets -trader

    By Anuradha Raghu
    KUALA LUMPUR, May 30 (Reuters) - Malaysian palm oil futures
on Friday slid to their lowest in over seven months, following
soyoil prices down and recording their biggest monthly loss in
nearly two years.
    Palm has dropped nearly 8 percent in May in its largest
monthly decline since September 2012, hurt by a stronger ringgit
 and an expected rise in supply.
    "The market is ... really going south," said a trader with a
foreign commodities brokerage in Malaysia. 
    "It's being dragged down by the lacklustre performance in
the U.S. and Dalian soyoil markets. Plus the ringgit has
strengthened."           
    The benchmark August contract on the Bursa Malaysia
Derivatives Exchange had inched down 1.6 percent to 2,421
ringgit ($753) per tonne by Friday's close.
    Prices in late trade dropped to 2,420 ringgit, their weakest
since Oct. 22. Weekly prices fell 3.8 percent, their biggest
fall since early January. 
    Total traded volume stood at 35,465 lots of 25 tonnes, just
above the usual 35,000 lots.   
    "There's been no major bearish news but we believe (the
decline) is more due to falling soybean oil, fears of rising
palm stocks and bearish chart play," said another Kuala
Lumpur-based dealer.
    "Going further, our next target of 2,350-2,380 ringgit is
still on our radar, but we need to watch price behaviour over
the next few sessions."
    Chart analysis showed that palm oil is expected to drop to
2,422 ringgit per tonne, as it has cleared a support at 2,472
ringgit, said Reuters market analyst Wang Tao. 
     
      
    A strong ringgit squeezes margins and makes palm a less
attractive feedstock option for overseas investors and refiners.
    The ringgit gained 1.5 percent in May on the back
of solid first-quarter economic growth in Malaysia, and after
the central bank signalled a rate hike. 
    Worries of bigger global soybean supplies also weighed on
investor sentiment. Brazil expects its next soybean crop to
yield a record 94 million tonnes under normal climate
conditions. 
    Larger supplies of soybeans for crushing would lower prices
of soyoil and potentially shift food and fuel demand away from
palm.
    The U.S. soyoil contract for July fell 0.7 percent in
late Asian trade, while the most active September soybean oil
contract on the Dalian Commodities Exchange lost 0.6
percent. 
    But some market participants expect palm prices, which have
lost about 9 percent this year, to take a breather next month as
a Muslim festival slows output, while driving up domestic
consumption in top producer Indonesia.
    "Next month is very important. We are moving into the
fasting month and production generally comes down a bit," the
first trader said. 
    "At the same time Indonesian exports will slow down as they
hold back palm oil for local consumption. This might help lift
the market from the doldrums."
    In other markets, Brent crude oil steadied around $110 a
barrel on Friday, near the top of its range over the last three
months, underpinned by supply worries and evidence of strong oil
demand in the United States, the world's top oil consumer. 
  Palm, soy and crude oil prices at 1011 GMT
                                                                                                                                                               
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JUN4    2431   -29.00    2426    2465     220
  MY PALM OIL      JUL4    2425   -39.00    2424    2470    4329
  MY PALM OIL      AUG4    2421   -40.00    2420    2467   19029
  CHINA PALM OLEIN SEP4    5882   -48.00    5862    5900  235256
  CHINA SOYOIL     SEP4    6762   -40.00    6750    6788  223938
  CBOT SOY OIL     JUL4   39.18    -0.23   39.14   39.55    4398
  NYMEX CRUDE      JUL4  103.28    -0.30  103.07  103.56   14023
                                                                                                                                                               
  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 = 3.2150 Malaysian ringgit)
 ($1 = 6.2473 Chinese yuan)

 (Editing by Joseph Radford and Sunil Nair)

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