Vegoils Palm slips to 2-wk low as equity markets fall

by **Cals** Wed 29 Jan 2014, 01:52

Vegoils Palm slips to 2-wk low as equity markets fall

Business & Markets 2014

Written by Reuters

Tuesday, 28 January 2014 19:31

JAKARTA (Jan 28): Malaysian palm oil futures dropped to their lowest in almost two weeks on Tuesday, hit by a decline in other vegetable oil prices and fragile equity markets, but a weak local currency helped curb losses.

The benchmark April contract on the Bursa Malaysia Derivatives Exchange ended 1.1 percent lower at 2,529 ringgit ($760) per tonne. Prices earlier reached a low of 2,519 ringgit, a level not seen since Jan. 15.

Total traded volume amounted to 35,987 lots of 25 tonnes, slightly above the usual 35,000 lots.

Palm was affected as the May soybean oil contract, the most active on the Dalian Commodities Exchange, declined 1.8 percent to its lowest level since 2006.

Emerging markets steadied after three days of intense selling due to concerns that slower growth in China and reduced U.S. monetary stimulus could hurt some economies dependent on exports and foreign capital.

"External factors, like the Dalian dropping to a new low, are pushing the market down, with big drops in stock markets too," said a trader with a foreign commodities brokerage in Malaysia.

"It hasn't fallen too drastically because weakness in the ringgit is helping the palm market avoid a sharp fall. The market is moving into a bear market."

The ringgit fell to its lowest since May 2010 on Monday, and although it recovered slightly on Tuesday, its potential to climb was limited by expectations of a further reduction in U.S. monetary stimulus.

A weaker ringgit improves margins for overseas buyers and refiners, lifting demand for palm oil, which is used in a variety of household products from soaps to cookies and chocolate.

Market participants were looking for more clues on global demand.

"Things are trading within a tight range," said a second trader, at a foreign commodities brokerage in Malaysia. He added that prices might trade firmer ahead of the Lunar New Year.

Exports of Malaysian palm oil products for Jan. 1-25 fell 10.5 percent to 1,017,662 tonnes from 1,137,374 tonnes shipped during Dec. 1-25, cargo surveyor Societe Generale de Surveillance said late on Monday.

In other markets, Brent crude oil rose to $107 a barrel as the steepest fall in three weeks prompted buying, but concerns over turmoil in emerging markets and a slowdown in China kept gains in check.

Palm, soy and crude oil prices at 1056 GMT

Contract        Month    Last   Change     Low    High Volume
MY PALM OIL      FEB4    2515   -25.00    2509    2527     179
MY PALM OIL      MAR4    2527   -25.00    2514    2535    1754
MY PALM OIL      APR4    2532   -27.00    2519    2544   15880
CHINA PALM OLEIN MAY4    5660 -124.00    5660    5750 330686
CHINA SOYOIL     MAY4    6436 -116.00    6430    6518 422758
CBOT SOY OIL     MAR4   37.14    +0.08   36.91   37.21    7626
NYMEX CRUDE      MAR4   96.16    +0.44   95.63   96.28   11004

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 = 3.3472 Malaysian ringgits)