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VEGOILS-Palm snaps six sessions of gains, but demand seen steady
August 29, 2013 / 10:28 AM / 4 years ago

VEGOILS-Palm snaps six sessions of gains, but demand seen steady

* Hot U.S. weather to hurt soy yields, curb soybean oil
    * Prices trade between 2,406-2,470 ringgit
    * Palm oil to drop to 2,407 ringgit-technicals

 (Updates prices)
    By Anuradha Raghu
    KUALA LUMPUR, Aug 29 (Reuters) - Malaysian palm oil futures
slipped on Thursday as investors took profits from six straight
sessions of gains that were driven by expectations that hot U.S.
weather would curb the availability of competing soybean oil. 
    Dry weather and insufficient rains in the U.S. Midwest
fanned concerns of tighter global oilseed supplies and have
driven palm oil prices up almost 3 percent so far this week.
Prices have also been supported by a weak ringgit currency,
which helps improve margins for overseas buyers. 
    Less soybeans for crushing into soyoil will benefit palm
markets as it could shift demand to the cheaper tropical oil. 
    "The market had rallied more than a hundred ringgit on the
back of the U.S. weather, weakness in the ringgit and the
strength of crude oil prices," said a trader with a foreign
commodities brokerage. The price of crude oil impacts demand for
palm oil which is used as feedstock for biodiesel.   
    "But now the palm market is at an overbought situation so
there should be a correction and profit-taking after the
windfall that drove prices up," the trader added.
    The benchmark November contract on the Bursa
Malaysia Derivatives Exchange lost 1.8 percent to close at 2,437
ringgit ($736) per tonne. Prices traded in a 2,406-2,470 ringgit
    Total traded volume stood at 45,260 lots of 25 tonnes each,
well above the average 35,000 lots.
    Technicals showed palm oil is expected to drop to 2,407
ringgit per tonne, as it could have completed a rebound from
2,137 ringgit, Reuters market analyst Wang Tao said.
    But healthy exports this month point to steady demand for
Malaysian palm oil. Shipments in the Aug. 1-25 period rose 7-8
percent compared to a month ago, underpinned by bigger purchases
from Europe, China and India.  
    "Exports at the end of the month could be marginally higher
by 2-4 percent compared to July," the trader added. 
    In other markets, Brent crude dropped to $115 a barrel as
the possibility of a delay in a U.S.-led military strike on
Syria helped calm concerns over Middle East oil supplies. 
    In vegetable oil markets, the U.S. soyoil contract for
December eased 0.6 percent in late Asian trade. The
most-active January soybean oil contract on the Dalian
Commodities Exchange fell 2.2 percent.     
  Palm, soy and crude oil prices at 1002 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      SEP3    2444   -45.00    2420    2463     139
  MY PALM OIL      OCT3    2444   -46.00    2416    2475    4286
  MY PALM OIL      NOV3    2437   -44.00    2406    2470   22917
  CHINA PALM OLEIN JAN4    5594  -200.00    5564    5764  766712
  CHINA SOYOIL     JAN4    7224  -164.00    7094    7366 1154718
  CBOT SOY OIL     DEC3   44.53    -0.25   44.03   44.90   11960
  NYMEX CRUDE      OCT3  109.11    -0.99  108.60  109.74   23338
  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=3.31 Malaysian ringgit)

 (Editing by Muralikumar Anantharaman and Himani Sarkar)

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