Vegoils Palm hits fresh 1 1/2-mth high, on estimates of output fall

by **Cals** Wed 23 Oct 2013, 00:49

Vegoils Palm hits fresh 1 1/2-mth high, on estimates of output fall

Business & Markets 2013

Written by Reuters

Tuesday, 22 October 2013 19:50

(22/10/13 19:27:09)
* Hits 2,456 rgt in late trade, on estimates Oct output fell
* Investors seen buying after growers' report -trader

KUALA LUMPUR (Oct 22): Malaysian palm oil futures climbed to a fresh one-and-a-half month high on Tuesday, reversing losses in the morning session on growers' estimates that output in the world's second-largest producer fell in October, instead of peaking.

Industry sources said figures from the Malaysian Palm Oil Association (MPOA) — a group of planters — showed that production in Oct 1-20 dropped 10.5 percent.

An output fall would make September the highest-producing month this year, and ease fears that palm oil stocks will surge in the coming months, as bumper supply of global oilseeds from U.S and South America flood the market.

"With these estimates, end-stocks will certainly remain below two million tonnes for the rest of the year. This prompted buyers to cover their short positions," said a trader with a local commodities brokerage in Malaysia.

By Tuesday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had risen 0.8 percent to 2,456 ringgit ($773) per tonne — the highest since Sept 6.

Prices in early trade had dipped to 2,420 ringgit.

Total traded volume stood at 37,964 lots of 25 tonnes each — higher than the usual 35,000 lots, as traders rushed to book positions.

A group of millers in southern Malaysia also reported estimates of falling production for the Oct 1-20 period, traders said.

Weaker output could keep stocks down, when buyers in China and Europe cut back on purchases of palm oil during winter, because the edible oil, clouds in cold temperatures.

"At the moment, exports look promising, but it could be lower next month onwards, until December," said a trader with a foreign commodities brokerage.

"But because production is not coming in heavy this year, I don't think there will be a build up in stocks," the trader added. Palm oil inventories at end-September, stood at 1.78 million tonnes.

Two reports by cargo surveyors showed, exports of Malaysian palm oil during Oct 1-20, rose 3 percent and 8 percent, compared to the same period a month ago, boosted by buying from Europe, China and Pakistan.

In other markets, U.S. crude oil fell below $99 a barrel on Tuesday, to its lowest since early July, after crude stockpiles rose more than expected in the world's top oil consumer, pushing the discount to North Sea Brent crude to its widest in six months.

In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.1 percent, in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange, lost 1.1 percent.