Vegoils Palm slips from 5-wk high, as investors book profits

by **Cals** Fri 18 Oct 2013, 05:44

Vegoils Palm slips from 5-wk high, as investors book profits

Business & Markets 2013

Written by Reuters

Thursday, 17 October 2013 19:42

(17/10/13 18:38:45)
* "Massive" profit-taking after prices surged on Wednesday, early Thursday -trader
* Output rise seen smaller than earlier estimated - trader
* Palm oil to rise to 2,447 ringgit - technicals

KUALA LUMPUR (Oct 17): Malaysian palm oil futures ended lower on Thursday, as investors booked profits from a five-week high that was buoyed by robust exports and optimism that output volumes in the world's second-largest producer, may not surge as much as initially expected.

A stronger ringgit, which hit a near one-month high of 3.1445, also added pressure to palm prices. The Malaysian ringgit led gains among emerging Asian currencies late Thursday, after the U.S. Congress approved a deal to avoid a potential default for the world's largest economy.

"There's massive profit-taking because yesterday and today morning, the market flew up nearly 60-70 ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.

The benchmark January contract on the Bursa Malaysia Derivatives Exchange had edged down 0.4 percent to 2,400 ringgit ($762) per tonne, by Thursday's close. Prices in early trade touched 2,432 ringgit — the highest since Sept 9.

Total traded volume stood at 39,043 lots of 25 tonnes each — higher than the usual 35,000 lots.

Market players have turned optimistic that palm oil output in Malaysia could be lower than earlier estimated. While October will be the highest producing month in 2013, September's outcome suggests the growth of fresh fruit bunches might be lower this year, traders said.

September's output only rose 10.2 percent to 1.91 million tonnes in September, according to industry regulator, the Malaysian Palm Oil Board (MPOB), below a forecast 15 percent rise.

"The MPOB figure kind of confirmed that we're not going to have a high crop month in the year 2013. That's why you see all the buying," said a trader with local commodities brokerage in Malaysia.

"Come December, output will taper off because the monsoon will be around the corner," the trader added.

Technicals were bullish. Malaysian palm oil is expected to rise to 2,447 ringgit per tonne, driven by a wave c — a powerful third wave of a three-wave cycle that developed from the July 26 low of 2,121 ringgit, Reuters market analyst Wang Tao, said.

Robust exports in the first half of October, also fuelled hopes that stockpiles will be kept in check, keeping prices supported.

Shipments of Malaysian palm oil products in the first half of October, rose 7-12 percent compared with a month ago, cargo surveyor data showed on Wednesday, thanks to healthy demand from China and Europe.

In other markets, oil fell towards $110 a barrel on Thursday, as U.S. inventory data pointed to a well-supplied market, and as investors took money off the table, ahead of a deluge of data held back by a government shut-down in the United States.

In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.2 percent, in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange, climbed 1.1 percent.