Palm oil pares gains on less than expected output drop
KUALA LUMPUR (Feb 22): Malaysian palm oil futures fell on Thursday evening, ending the day slightly weaker after posting gains at noon, as market sentiment turned bearish on a less than expected drop in output.
The market was up earlier on the back of a weaker ringgit and overnight gains in soyoil on the U.S. Chicago Board of Trade (CBOT).
A weaker ringgit, palm's currency of trade, typically makes the tropical oil cheaper for holders of foreign currencies.
The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was down 0.04% at 2,488 ringgit (US$635.50) a tonne at the close of trade.
Trading volumes stood at 40,154 lots of 25 tonnes each on Thursday evening.
"Malaysian Palm Oil Association's output drop is less than expected," said a Kuala Lumpur-based trader, referring to Feb 1-20 output data, which she said showed a 6.4% decline versus the corresponding period last month.
"The market was expecting a double-digit or high single-digit fall."
Output in Malaysia, the world's second largest palm producer, is forecast to decline from a month earlier, in line with seasonal trend and on fewer working days in February.
In other related oils, the Chicago Board of Trade's March soybean oil contract was down 0.3%, while the May soybean oil on China's Dalian Commodity Exchange rose 0.6%.
The Dalian May palm oil contract was up 0.2%.
Palm oil prices are impacted by rival edible oils, as they compete for a share in the global vegetable oils market.
Technical signals are mixed for palm oil and will become clearer when the chart develops further, said Reuters market analyst for commodities and energy technicals Wang Tao.
Palm, soy and crude oil prices as of 1048 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR8 2510 -1.00 2493 2521 1852
MY PALM OIL APR8 2501 +2.00 2484 2512 6168
MY PALM OIL MAY8 2490 -1.00 2477 2505 20025
CHINA PALM OLEIN MAY8 5150 +8.00 5132 5192 166464
CHINA SOYOIL MAY8 5658 +32.00 5640 5686 176562
CBOT SOY OIL MAY8 32.19 -0.09 32.13 32.29 7353
INDIA PALM OIL FEB8 581.10 +0.30 579.50 582.6 1119
INDIA SOYOIL MAR8 751.5 +1.25 749.25 753 19590
NYMEX CRUDE APR8 61.28 -0.40 60.75 61.40 79276
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
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel
(US$1 = 3.9150 ringgit)
(US$1 = 64.9800 Indian rupees)
(US$1 = 6.3588 Chinese yuan)
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