Vegoils Palm falls on profit-taking but weak ringgit, wet weather cap losses

Vegoils Palm falls on profit-taking but weak ringgit, wet weather cap losses
Business & Markets 2013
Written by Reuters
Tuesday, 17 December 2013 18:45

KUALA LUMPUR (Dec 17): Malaysian palm oil futures ended lower on Tuesday as investors booked profits from gains in the morning session, although losses were capped by weakness in the ringgit and worries that another wave of floods would curb supply of the tropical oil.

"The market pulled up in the morning on expectations of bad weather and the weak ringgit, but there was no follow-through," said a trader with a foreign commodities brokerage."

"There was a bit of profit-taking which pushed the market down again," the trader added.

The benchmark March contract on the Bursa Malaysia Derivatives Exchange edged down 0.2 percent to 2,574 ringgit ($792) per tonne by Tuesday's close, shedding gains from the day's high of 2,602 ringgit.

Total traded volume stood at 34,210 lots of 25 tonnes, slightly below the usual 35,000 lots.

The Malaysian ringgit was trading at 3.2400 against the U.S. dollar late Tuesday, having weakened about 5.6 percent
so far in 2013.

Market players expect the ringgit to extend losses towards
the year-end and lend support to palm as it makes the
ringgit-priced feedstock cheaper for overseas investors.

Prices were also propped up by fears that harvesting and transportation of fresh fruit to mills will be disrupted by a second wave of monsoon rain over several states in Malaysia, the world's second-largest grower.

Malaysia's Meteorological Department on Tuesday issued a "yellow stage" advisory over the states of Johor and Pahang, warning of heavy rains until Sunday that may cause more floods in low-lying areas where palm is typically grown.

Palm prices, which have gained about 6 percent so far this year were also supported by a small recovery in exports.

Cargo surveyors reported that Malaysian palm oil shipments in the first half of December fell between 12-14 percent compared to a month ago, a slight improvement from steeper declines recorded earlier in the month.

Analysts said Malaysia's crude palm oil export tax, which will be kept unchanged at 5 percent in January, will make the No. 2 producer's supplies more competitively priced than top producer and rival Indonesia.

"This will help improve the export outlook for Malaysia's palm oil, hence lifting prices for the commodity," said Phillip Futures analyst Tan Chee Tat in a note on Tuesday.

In other markets, Brent oil slipped below $109 a barrel on Tuesday, ahead of a key U.S. Federal Reserve meeting in which the central bank may decide to scale back its massive stimulus programme.

In other competing vegetable oil markets, the U.S. soyoil contract for January rose 0.1 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.2 percent.


Palm, soy and crude oil prices at 1021 GMT

Contract Month Last Change Low High Volume
MY PALM OIL JAN4 2534 -7.00 2524 2557 1369
MY PALM OIL FEB4 2559 -9.00 2557 2590 8877
MY PALM OIL MAR4 2574 -6.00 2571 2602 17424
CHINA PALM OLEIN MAY4 6076 +12.00 6062 6118 714330
CHINA SOYOIL MAY4 7022 -14.00 7010 7054 698692
CBOT SOY OIL JAN4 39.84 +0.09 39.61 39.87 4234
NYMEX CRUDE JAN4 97.26 -0.22 97.01 97.46 6392

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=3.24 Malaysian ringgit)