Vegoils Palm shoots to 7-mth high as wet weather stokes output fears

by **Cals** Tue 29 Oct 2013, 23:53

Vegoils Palm shoots to 7-mth high as wet weather stokes output fears

Business & Markets 2013

Written by Reuters

Tuesday, 29 October 2013 19:00

29/10/13 18:43:37

(Rewrites lead to reflect price change, adds new trader quote, updates prices)
* Prices jump to 2,503 ringgit in late trade, highest since March 25
* Rally triggered by output worries -trader

KUALA LUMPUR (Oct 29): Malaysian palm oil futures jumped to their highest in seven months on Tuesday on fears that thunderstorms in several palm-growing areas in the world's No.2 producer could disrupt supply of the tropical oil.

Thunderstorms and strong winds are expected over most parts of Malaysia in the coming week, the country's meteorological department website showed on Tuesday, including in the major palm oil-producing states of Sabah, Johor and Pahang.

"The rally was triggered by weather vagaries, which could lead to lower output and low extraction rates," said a trader with a local commodities brokerage in Kuala Lumpur.

The meteorological department also showed that the monsoon season this year is expected to start in the second week of November and subside from January onwards. Heavy rains could cause floods in some areas, it warned.

Floods would disrupt palm oil harvesting and complicate transportation of fresh fruit bunches to mills, leading to tighter supplies of the tropical oil.

"Speculatives are also trimming their bearish bets," the trader added. "All signs point that prices can rally over 2,500-2,600 ringgit by mid-November."

The benchmark January contract on the Bursa Malaysia Derivatives Exchange climbed to 2,503 ringgit, its
highest since March 25 in late Tuesday trade.

Prices then settled at 2,497 ringgit ($792) by the day's close, a 1.4 percent gain from the previous session.

Total traded volume stood at 48,213 lots of 25 tonnes each, much higher than the usual 35,000 lots.

Traders said a group of millers reported that yields of fresh fruit bunches in the southern region of Malaysia has dropped 5 percent in the Oct. 1-25 period compared to a month ago, while production fell nearly 1 percent.

Overall lower output from the rest of the country could offset sluggish export demand normally seen at the end of the year and prevent palm stocks from surging.

Stocks stood at 1.78 million tonnes as of the end of September.

In other markets, Brent crude oil consolidated around $109 a barrel on Tuesday, holding on to most of the recent gains after reports of a sharp drop in Libyan oil exports rekindled worries over global supply.

In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.6 percent in late Asian trade. The most-active May soybean oil contract on the Dalian Commodities Exchange dropped 1.0 percent.

Palm, soy and crude oil prices at 1017 GMT
Contract	Month	Last	Change	Low	High	Volume
MY PALM OIL	NOV3	2529	+49.00	2480	2529	153
MY PALM OIL	DEC3	2507	+36.00	2466	2513	5318
MY PALM OIL	JAN4	2497	+34.00	2454	2503	25668
CHINA PALM OLEIN	MAY4	6104	+14.00	6042	6136	812172
CHINA SOYOIL	MAY4	7056	-70.00	7026	7122	733358
CBOT SOY OIL	DEC3	40.60	+0.24	40.33	40.67	7131
NYMEX CRUDE	DEC3	98.36	-0.32	98.13	98.57	11765

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=3.15 Malaysian ringgit)