Vegoils Palm oil reverses losses on forecasts for drop in production

by **Cals** Sat 09 Jan 2016, 01:54

Vegoils

[size=28]Palm oil reverses losses on forecasts for drop in production

By Reuters / Reuters | January 8, 2016 : 7:30 PM MYT

KUALA LUMPUR (Jan 8): Malaysian palm oil futures bounced back on Friday after two days of losses as market focus shifted to a major industry report due early next week, which is forecast to show a decline in production.

The benchmark palm oil contract for March on the Bursa Malaysia Derivatives Exchange gained 0.5% to RM2,433 (US$556.11) per tonne. Traded volume stood at 25,818 lots of 25 tonnes each at the close of trade.

Palm declined for three out of five sessions this week due to weak export demand, a narrowing discount to rival soyoil prices and weakness across financial markets triggered by plunging Chinese markets and a weakening of the yuan currency. Palm hit a low of RM2,418 on Thursday, its lowest level since Dec 18.

Despite the negative factors, which also include a strengthening ringgit, an expected fall in output should lend support to palm prices, said a trader in Kuala Lumpur.

"Most traders are anticipating a bullish to neutral report on Monday from the Malaysian Palm Oil Board, thus the short covering ahead of the report," he said.

"It's a weather market still," said another trader, referring to dryness caused by the El Nino weather pattern, which lowers palm fruit yields.

Government body MPOB is set to release its palm oil data for the month of December on Jan. 11 after 0430 GMT. Output is likely to have dropped to 1.36 million tonnes, down 17.8% from November and the lowest since February 2015, a Reuters poll showed.

Palm stocks in the world's No.2 producer are seen falling nearly 18% to 1.36 million tonnes in December from a record high in November, according to the poll.

The survey also forecast a 6.6% drop in December exports on slowing demand from China and Europe.

A stronger ringgit, which gained 0.3% against the dollar on Friday to 4.3750, makes the vegetable oil more expensive for foreign buyers.

The US March soyoil contract rose 0.3%, while the May soybean oil contract on the Dalian Commodity Exchange lost 0.1%.

Palm, soy and crude oil prices at 1031 GMT

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Contract	Month	Last	Change	Low	High	Volume
MY PALM OIL	JAN6	2263	+10.00	2248	2265	51
MY PALM OIL	FEB6	2355	+4.00	2334	2365	1760
MY PALM OIL	MAR6	2433	+11.00	2409	2440	14978
CHINA PALM OLEIN	MAY6	4728	-4.00	4698	4778	1410710
CHINA SOYOIL	MAY6	5624	-4.00	5606	5666	573404
CBOT SOY OIL	MAR6	29.72	-1.80	29.60	29.77	5939
INDIA PALM OIL	JAN6	411.40	-1.80	410.80	415.40	677
INDIA SOYOIL	JAN6	604.55	-2.00	604.50	607.80	15350
NYMEX CRUDE	FEB6	33.56	+0.29	33.26	34.34	57184

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Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.3750)
(US$1 = 66.7050 Indian rupees)
(US$1 = 6.5910 Chinese yuan)
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