Malaysian Palm Oil Price Up on Surge in Exports, but Higher Stocks Cap Gains

KUALA LUMPUR: Malaysian palm oil futures rose on Monday on a surge in demand in the first 10 days of the month and as the ringgit weakened, but gains were capped by industry data showing stocks in the world’s No.2 producer have swelled to a five-month high.

Cargo surveyor Intertek Testing Services reported that exports of Malaysian palm oil products for May 1-10 rose 41.3 percent from the same period in April to 458,677 tonnes as shipments to India and Europe doubled, with buyers snapping up duty-free cargoes of crude palm oil.      Another cargo surveyor Societe Generale de Surveillance reported a 45 percent increase in exports in the same period.

But despite the sudden jump in demand, with a weaker Malaysian currency making the ringgit-denominated palm feedstock cheaper for overseas buyers, the rise in end-stocks kept a lid on gains.

The Malaysian Palm Oil Board put out figures showing palm inventories at the end of April rose to 2.19 million tonnes, their highest since November and exceeding market forecasts of 2.13 million.  

“Our exports were very strong, the ringgit is weak and overseas markets are slightly friendly … but the market is not showing it,” said a trader with a foreign commodities brokerage in Kuala Lumpur, adding that high stocks would hold the market back.

The benchmark July contract on the Bursa Malaysia Derivatives exchange had inched up 1.5 percent to 2,195 ringgit ($609.98) a tonne by Monday’s close.

Total traded volume stood at 36,211 lots of 25 tonnes each, above the average 35,000 lots.

The ringgit had fallen 0.1 percent to 3.5985 per U.S. dollar by 1015 GMT Monday.

Rising output in April signals the end of palm’s low production season, paving the way to bigger stockpiles which would weigh on benchmark prices, analysts said.

“We expect stocks to rise further in the coming months, driven by the seasonally higher CPO output,” said Ivy Ng, regional head of plantations research at CIMB Investment Bank.

“This could dampen CPO prices unless Indonesia is successful in raising its biodiesel usage under the new biodiesel programme soon.”

In vegetable oil markets, the U.S. July soyoil contract was up 0.6 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange gained 1.3 percent.

In other markets, oil slipped below $65 a barrel on Monday as signs that U.S. shale oil production was recovering after a recent price rally renewed concerns of a growing global supply glut.

Palm, soy and crude oil prices at 1016 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      MAY5       0    +0.00       0    2161       7
  MY PALM OIL      JUN5    2203   +34.00    2178    2203    1349
  MY PALM OIL      JUL5    2195   +33.00    2170    2196   17684
  CHINA PALM OLEIN SEP5    5094   +52.00    5018    5100  709774
  CHINA SOYOIL     SEP5    5920   +78.00    5822    5924  979014
  CBOT SOY OIL     JUL5   33.17    +3.30   32.86   33.19    5071
  INDIA PALM OIL   MAY5  451.20    +3.30  445.80  451.20    1682
  INDIA SOYOIL     JUN5  607.50    +7.80  600.00  607.50   47075
  NYMEX CRUDE      JUN5   59.25    -0.14   58.87   59.66   24040
  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
($1 = 3.5985 Malaysian ringgit)
($1 = 6.2096 Chinese yuan)
($1 = 63.97 Indian rupees)
– Reuters

Source : The Star


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