KUALA LUMPUR, Oct 1 (Reuters) – Malaysian palm oil futures dipped on Wednesday as investors turned wary of record supplies of rival oilseeds that could overwhelm global demand and curb appetite for the tropical oil. Palm prices rose 15 percent in September, their biggest monthly gain since April 2009, lifted by robust export demand and anticipation for output to weaken.
But traders said while domestic fundamentals were supportive, the prospects of huge soybean crop in the United States and South America painted a bleak picture for soyoil prices, which are tracked by palm.
U.S. soybean stocks ended the 2013/14 marketing year much smaller than expected at 92 million bushels, USDA data showed on Tuesday. But the market shrugged off the report showing lower supplies as harvesting of a record crop of almost 4 billion bushels gathered pace.
“The market is trying to find fresh direction,” said a trader with a local commodities brokerage in Malaysia. “October output and demand will be crucial to sustain the current relatively high prices.”
The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange had edged down 1 percent to 2,199 ringgit ($672) per tonne by Wednesday’s close, marking its second fall in eight sessions. Prices ranged between 2,189-2,223 ringgit.
Total traded volume stood at 43,624 lots of 25 tonnes each, above the usual 35,000 lots.
Technicals showed palm oil faces resistance at 2,224 ringgit per tonne and may retrace to support at 2,194 ringgit, said Reuters market analyst Wang Tao.
Market participants are looking to key industry data next week that will reveal Malaysia’s palm oil end-stocks and production in September, and hint of trends going into this month.
A surprise drop in Malaysian output, and decisions by the world’s top two palm growers to exempt export duties on the crude grade are likely to cap a rise in inventories.
The export tax move had an immediate effect on buying interest for Malaysian palm oil products. Cargo surveyors reported that the No.2 producer’s exports were 16-17 percent higher in September compared with August, with stronger demand from India, China and Europe. PALM/ITS PALM/SGS
Indonesia’s move to pass a plantation bill that aims to maximise land usage and impose stricter rules on foreign ownership may prompt Malaysian planters to take a “wait and see” attitude before committing to more planting activities in the top grower, analysts said.
The bill, however, is unlikely to affect benchmark prices for now, analysts say. “We are keeping our ‘neutral’ call as we think that the news is unlikely to affect crude palm oil prices in the near term,” said Kenanga Investment Bank analyst Alan Lim.
“We also maintain our average CPO prices of 2,500 ringgit per metric tonne unchanged for 2014 and 2015.” In vegetable oil markets, the U.S. soyoil contract for December BOZ4 rose 0.2 percent in late Asian trade. Chinese markets are closed for a week-long holiday.
In other markets, oil edged up from a more than two-year low to near $95 a barrel on Wednesday as a slightly better-than-expected Chinese factory survey countered worries of an economic slowdown in the world’s No. 2 oil consumer and ample supplies. O/R
Palm, soy and crude oil prices at 1018 GMT
Contract Month Last Change Low High Volume
MY PALM OIL OCT4 2210 -22.00 2210 2257 41
MY PALM OIL NOV4 2205 -22.00 2203 2234 2381
MY PALM OIL DEC4 2199 -18.00 2189 2223 24433
CHINA PALM OLEIN JAN5 0 +0.00 0 0 0
CHINA SOYOIL JAN5 5898 +62.00 5890 5958 313544
INDIA SOYOIL OCT4 608.55 -5.45 606.60 615.80 47165
NYMEX CRUDE NOV4 91.56 +0.39 91.22 91.73 21373
Palm oil prices in Malaysian ringgit per tonne ($1 = 3.27 Malaysian ringgit)
CBOT soy oil in U.S. cents per pound ($1 = 6.1395 Chinese yuan)
Dalian soy oil and RBD palm olein in Chinese yuan per tonne ($1 = 61.71 Indian rupees)
India soy oil in Indian rupee per 10 kg
Crude in U.S. dollars per barrel