Vegoils Palm snaps 4 days of losses; weak exports cap gains

by **Cals** Mon 11 Nov 2013, 14:28

Vegoils Palm snaps 4 days of losses; weak exports cap gains

Business & Markets 2013

Written by Reuters

Monday, 11 November 2013 13:54

KUALA LUMPUR (Nov 11): Malaysian palm oil futures inched up on Monday, snapping four straight days of losses as investors squared positions ahead of a key industry report on stocks and output, although weak exports kept a lid on gains.
Data released by the Malaysian Palm Oil Board (MPOB) after the midday break showed that stocks in Malaysia, the world's second-largest producer, rose to 1.85 million tonnes at end-October, slightly above market expectations of 1.82 million tonnes.
The market had expected weak palm oil output in October, as the tropical oil's high-cycle began to wane and monsoon rains complicated harvesting, to restrict a build up in stocks.
By the midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had climbed 1.4 percent to 2,542 ringgit ($794) per tonne.
Total traded volume stood at 13,725 lots of 25 tonnes each on Thursday, lower than the usual 12,500 lots as some investors stayed on the sidelines ahead of the official stocks report.
"There's a technical rebound today. A lot of people had oversold last week," said a trader with a foreign commodities brokerage, referring to last week's almost 5 percent drop -- biggest such decline since March.
"We are heading into the low production cycle. From now onwards to the first quarter of next year, the supply and demand scene for palm is going to be friendly," the trader added.
Weak exports, however, weighed on prices. Cargo surveyor Intertek Testing Services showed that exports in the Nov. 1-10 period fell 13 percent to 472,321 tonnes shipped, as purchases from the world's biggest palm oil buyer, India, fell steeply.
"Exports for the first ten days seem to be on the weak side. An average of 47,000 tonnes is a bit disappointing," the trader added.
Another cargo surveyor Societe Generale de Surveillance will released export data for the same period later in the day.
Technicals were bearish.
Malaysian palm oil is expected to test support at 2,491 ringgit per tonne, a break below which will lead to a further loss to 2,449 ringgit, said Reuters market analyst Wang Tao.
In other markets, Brent crude edged up towards $106 a barrel after Iran and six world powers failed to reach a deal on Tehran's nuclear programme, while data showed a slight rise in implied fuel demand in China.
In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.2 percent in early Asian trade.
The most-active May soybean oil contract on the Dalian Commodities Exchange fell 0.2 percent. - Reuters