Vegoils Palm hits 5-wk high on robust exports, investors turn bullish on end-stocks

by **Cals** Thu 17 Oct 2013, 01:12

Vegoils Palm hits 5-wk high on robust exports, investors turn bullish on end-stocks

Business & Markets 2013

Written by Reuters

Wednesday, 16 October 2013 18:37

KUALA LUMPUR (Oct 16): Malaysian palm oil futures climbed to their highest level in more than five weeks on Wednesday after healthy demand for the tropical oil fuelled hopes that stockpiles would be kept in check despite a seasonal rise in output in the world's top producers.

Shipments of Malaysian palm oil products in the first half of October rose 6.6 percent to 781,043 tonnes compared to a month before, cargo surveyor Intertek Testing Services said, fuelled by higher demand from Europe and China.

Another cargo surveyor, Societe Generale de Surveillance, said exports for the same period climbed 11.8 percent.

For the whole month of September, Malaysia's exports rose 5.2 percent to 1.61 million tonnes, while the world's largest producer, Indonesia, sold 1.64 million, 11 percent more than in August.

Oil palm trees produce bigger yields during the cycle that starts in the second half of the year and typically peaks in October. But strong exports have led some market players to trim their stocks forecasts.

"Two months ago everyone thought stocks would peak at 2.2-2.3 million tonnes. Right now we are looking at 2.1 million tonnes, maybe not even exceeding 2 million tonnes. These are very bullish stocks figures," said a trader with a foreign commodities brokerage.

"Even if production peaks in October, it's not that significant because of the low numbers from September," the Kuala Lumpur-based trader added. End-stocks currently stand at 1.78 million tonnes.

By Wednesday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had risen 1.8 percent to 2,410 ringgit ($759) per tonne, the highest since Sept. 9.

Total traded volume stood at 39,694 lots of 25 tonnes each, higher than the usual 35,000 lots.

Technicals showed that Malaysian palm oil is expected to test support at 2,349 ringgit per tonne, a break below which will open the way towards 2,317 ringgit, Reuters market analyst Wang Tao said.

Stocks could shrink to about 1.5-1.6 million tonnes in 2014, leading to tighter global oilseed supplies, the trader said.

But investors remain cautious because of U.S. fiscal talks and are avoiding risky bets for now.

U.S. Senate leaders are continuing to negotiate on legislation to raise the government's borrowing authority and provide funding. Lawmakers said a deal was close, but there were still details to be worked out.

Malaysia, the world's No.2 palm oil producer, has set its crude palm oil export tax for November at 4.5 percent, a government circular showed on Wednesday.

In other markets, global oil prices held steady on Wednesday as the U.S. Senate inched towards a last-minute deal.

In competing vegetable oil markets, the U.S. soyoil contract for December rose 1.1 percent in late Asian trade. The most active January soybean oil contract on the Dalian Commodities Exchange rose 0.7 percent.

Palm, soy and crude oil prices at 1010 GMT
Contract	Month	Last	Change	Low	High	Volume
MY PALM OIL	NOV3	2399	+37.00	2370	2401	796
MY PALM OIL	DEC3	2403	+41.00	2368	2405	9687
MY PALM OIL	JAN4	2410	2410	2373	2410	17758
CHINA PALM OLEIN	JAN4	5662	5662	5650	5712	226716
CHINA SOYOIL	JAN4	7118	+52.00	7068	7124	487468
CBOT SOY OIL	DEC3	41.12	+0.46	40.61	41.23	7114
NYMEX CRUDE	NOV3	101.22	+0.02	100.88	101.50	13797

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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=3.174 Malaysian ringgit)[/color]