Malaysian Palm Oil Price Rebounds to Near 1-week High
KUALA LUMPUR: Malaysian palm oil futures rebounded in late Wednesday trade to their highest in nearly a week,reversing intraday losses as gains in competing soyoil markets as well as hopes for smaller output in December supported prices.
Prices in early trade had slipped nearly 2 percent to hover at more than two-month lows, tracking losses in overnight U.S. soybean oil and volatility in crude oil markets.
“There signs of recovery in the crude oil futures, U.S. soybean oil and more importantly the estimates for December output,” said a trader with a local commodities brokerage in Malaysia, adding that traders expect December palm production to dip by as much as 13-14 percent.
“This talk, and some buying in the cash market lifted futures. Speculators were keen buyers today after seeing prices plunge the previous two days,” the trader added.
The benchmark February contract on the Bursa Malaysia Derivatives Exchange ended 1.4 percent higher at 2,170 ringgit ($631) per tonne, with intraday prices pulling up from a low of 2,102 ringgit to reach 2,185 ringgit – a Nov. 27 high.
Total traded volume stood at 57,888 lots of 25 tonnes, much higher than the usual 35,000 lots.
The U.S. soyoil contract for December fell as much as 3.4 percent on Tuesday to 31.12 cents a pound, pressured by fears of a bumper South American soybean output.
The contract later rose 1.3 percent by 1040 GMT. The most active May soybean oil contract on the Dalian Commodity Exchange eased 0.3 percent.
Analysts say beneficial rains have boosted expectations of South American soy production, and more crop-friendly weather is expected in the coming days.
Bigger supplies of competing soybeans could channel food and fuel demand away from palm oil.
Some market players say the volatile oil market will heavily influence palm oil futures in the near term, and limit gains in the tropical oil.
“Weak crude oil prices is the main thing. The next support for palm is between 2,025-2,050 ringgit, with the higher side to be capped at 2,180 ringgit,” a second Kuala Lumpur-based trader said.
Trade in oil has been turbulent since OPEC said last week it would not lower output despite an oversupplied market.
Brent rose to $70.75 a barrel by 1016 GMT, after falling $2 on Tuesday. U.S. crude rose to $67.33, up 45 cents from the previous session when prices dropped more than $2.
Palm, soy and crude oil prices at 1047 GMT
|MY PALM OIL||DEC4||2160||+31.00||2110||2160||227|
|MY PALM OIL||JAN5||2181||+38.00||2110||2190||2450|
|MY PALM OIL||FEB5||2170||+30.00||2102||2185||30745|
|CHINA PALM OLEIN||MAY5||5044||-32.00||4980||5116||1746002|
|CBOT SOY OIL||JAN5||31.57||+4.00||31.28||31.71||12412|
|INDIA PALM OIL||DEC4||436.40||+4.00||430.30||437.70||935|