Vegoils Better-than-expected export demand lifts palm oil

by **Cals** Tue 26 Nov 2013, 05:03

Vegoils Better-than-expected export demand lifts palm oil

Business & Markets 2013

Written by Reuters

Monday, 25 November 2013 16:02

KUALA LUMPUR (Nov 25): Malaysian palm oil futures inched up on Monday after better-than-expected exports from the world's No.2 producer signalled that demand for the tropical oil could hold for now, despite concern that buyers could switch to substitutes in winter.
Palm oil tends to solidify in cold temperature and that usually cuts demand towards the end of the year as buyers in the northern hemisphere switch to other edible oils such as soyoil.
Export data from cargo surveyor Intertek Testing Services showed that exports of Malaysian palm oil shipped from Nov. 1-25 stood at 1,229,580 tonnes, only 0.1 percent lower than in the same period in October, as higher shipments to Europe and India offset weaker demand from China.
"The export data sends a positive message on prices because the market was previously expecting a decline in exports," said
Kenanga Investment analyst Alan Lim.
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange was up 0.5 percent at 2,656 ringgit ($825) per tonne, with prices trading in a tight range between 2,640-2,664 ringgit.
Total traded volume stood at 12,068 lots of 25 tonnes each, slightly below the average 12,500 lots.
Technicals showed that a bullish target at 2,716 ringgit per tonne remained in place for Malaysian palm oil, as it was riding on a powerful wave C, said Reuters market analyst Wang Tao.
A higher biofuel blend to be imposed by Indonesia, the world's largest palm oil grower, could see more of its palm oil snapped up for domestic use, leaving importers to look for cheaper deals in rival Malaysia.
"The biodiesel plan in Indonesia seems to be moving swiftly. If there is less palm oil available for export in Indonesia, the
demand will shift to Malaysia," Lim said.
Indonesia will also raise its December crude palm oil export tax to 12 percent from 9 percent in November. Malaysia on the other hand has set its export tax at a more competitive 5 percent.
Another cargo surveyor, Societe Generale de Surveillance, will release its export data for the same Nov. 1-25 period later
on Monday.
In other markets, Brent crude dropped around $3 a barrel on Monday as supply fears eased following a breakthrough nuclear deal between world powers and Iran over the weekend.
In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.2 percent in early 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 0608 GMT

Contract          Month    Last   Change     Low    High Volume
MY PALM OIL      DEC3    2638    -2.00    2631    2650     100
MY PALM OIL      JAN4    2654   +12.00    2639    2663    2423
MY PALM OIL      FEB4    2656   +14.00    2640    2664    6386
CHINA PALM OLEIN MAY4    6454    +2.00    6400    6494 608082
CHINA SOYOIL     MAY4    7328   -14.00    7292    7352 566308
CBOT SOY OIL     JAN4   41.49    +0.04   41.29   41.58    3620
NYMEX CRUDE      JAN4   93.48    -1.36   93.45   94.19   14859

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=3.22 Malaysian ringgit)