Palm oil pares gains on less than expected output drop

TheEdge Thu, Feb 22, 2018 09:05pm - 6 years View Original


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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