Vegoils Palm oil fails to hold gains, but supply concerns support

by **Cals** Thu 14 Nov 2013, 21:20

Vegoils Palm oil fails to hold gains, but supply concerns support

Business & Markets 2013

Written by Reuters

Thursday, 14 November 2013 18:52

KUALA LUMPUR (Nov 14): Malaysian palm oil futures ended lower on Thursday as investors turned cautious about risky bets, but uncertainty about supplies of competing edible oil from the Philippines propped up prices.

Palm oil prices rose to near two-week highs on Wednesday on concerns that Typhoon Haiyan had damaged coconut crops in the Philippines and could disrupt the supply of coconut oil from one of the world's top producers.

By Thursday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had edged down 0.6 percent to 2,588 ringgit ($809) per tonne, with prices moving in a tight range between 2,583-2,617 ringgit.

Total traded volume stood at 29,368 lots of 25 tonnes each on Thursday, lower than the average 35,000 lots as some investors chose to stay on the sidelines.

Any shortage of Philippine coconut oil could channel demand to palm oil-based substitutes such as palm kernel oil. The price of crude palm kernel oil rose to 3,802 ringgit per tonne on Thursday from 3,720 ringgit on Wednesday in choppy trade.

Futures market players are avoiding risk as prices hover near the 2,600 ringgit mark, waiting for more news on export demand and Southeast Asian palm output.

"The 2,600 ringgit level is a critical point. Buyers and sellers are a bit cautious — people are unsure and are waiting for the next bit of news before making any moves," said a trader with a foreign commodities brokerage.

"Palm kernel oil prices are choppy. Players are quite sensitive to buying and selling because of the situation in the Philippines," the Malaysia-based trader added.

Palm oil futures will probably trade in a range of 2,400-2,600 ringgit over the next six months, leading industry analyst Dorab Mistry said on Thursday, but they could climb as high as 2,800 ringgit depending on output in top producer Indonesia and the success of its biodiesel mandate.

Mistry's forecast, given at a vegetable oil meeting in China, reverses his earlier prediction that prices would be stuck in a 2,200-2,400 ringgit range and could even fall to 2,000 ringgit in early January.

Investors are waiting for cargo surveyor export data for the first half of November, which will be released on Friday, to gauge winter demand for the tropical oil.

The Malaysian government will also announce its crude palm oil export tax for December on Friday. The No.2 producer has kept its export duty at 4.5 percent since March.

In other markets, Brent oil rose towards $108 per barrel on Thursday, bolstered by Federal Reserve comments which reassured investors that the U.S. would maintain stimulus measures for now, and a warning of likely rising prices from the International Energy Agency.

In competing vegetable oil markets, the U.S. soyoil contract for December rose 0.4 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange rose 1 percent.

Palm, soy and crude oil prices at 1021 GMT
Contract	Month	Last	Change	Low	High	Volume
MY PALM OIL	NOV3	2578	-16.00	2578	2580	31
MY PALM OIL	DEC3	2576	-26.00	2574	2601	2762
MY PALM OIL	JAN4	2588	-16.00	2583	2617	15639
CHINA PALM OLEIN	MAY4	6332	+36.00	6282	6344	624410
CHINA SOYOIL	MAY4	7282	+70.00	7224	7296	852508
CBOT SOY OIL	DEC3	41.12	+0.16	40.86	41.26	5299
NYMEX CRUDE	DEC3	93.81	-0.07	93.48	94.03	10898

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 = 3.20 Malaysian ringgit)