Palm Slips To Over 1-Wk Low As Crude Drops And Strong Ringgit

KUALA LUMPUR, Oct 2 (Reuters) – Malaysian palm oil futures slipped to their lowest in more than a week on Thursday, reversing gains in the morning session after crude prices dropped to a 27-month low and the ringgit climbed higher, curbing appetite for the tropical oil.

Oil prices hit their lowest level since June 2012 on Thursday, with benchmark Brent prices dropping below $92 a barrel, as price cuts from top producer Saudi Arabia added to supply glut worries and weak global economic data. O/R
Weaker oil prices makes palm a less attractive option to be used as biodiesel feedstock, eating into demand.

Soyoil prices tracked by palm also took a hit. The U.S. soyoil contract for December BOZ4 lost more than 1.0 percent in late Asian trade.

“Crude oil dropped, soybean oil dropped, and palm has to follow,” said a trader with a foreign commodities brokerage in Kuala Lumpur. “There’s some massive profit-taking. After the market has been holding so well, there’s now a reason to sell.”

The benchmark December contract FCPOc3 on the Bursa Malaysia Derivatives Exchange fell as much as to 2,137 ringgit, the lowest since Sept. 24. It later settled at 2,150 ringgit ($662) per tonne, down 2.2 percent from the previous day.

Total traded volume stood at 45,828 lots of 25 tonnes each, above the average 35,000 lots.
Interest for the tropical oil was also curbed by the stronger Malaysian ringgit MYR-MY, which led gains among Asian currencies after a disappointing reading on U.S. factory output blunted the dollar’s strength.

The currency gained 0.57 percent late Thursday to 3.255 against the greenback, making the ringgit-priced palm feedstock more expensive for international buyers.EMRG/FRX

Industry players are watching for the pace of output and inventory levels in the top growers, Indonesia and Malaysia, which account for about 85 percent of global palm oil supply.

Commodities analyst James Fry of LMC International earlier told an industry conference that competition between Indonesia and Malaysia to export more palm oil could help reduce stockpiles from November onwards.

The two producers are offering tax-free exports of crude palm oil in October, prompting consumers to snap up the tropical oil in favour of other competing edible oils.

“Looking forward, we want to see what’s going to happen to the production and export demand in October,” a second Malaysia-based palm oil trader said.

Palm, soy and crude oil prices at 1024 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      OCT4    2150   -60.00    2095    2224      45
  MY PALM OIL      NOV4    2165   -41.00    2153    2226    3781
  MY PALM OIL      DEC4    2150   -45.00    2137    2211   28263
  CHINA PALM OLEIN JAN5       0    +0.00       0       0       0
  CHINA SOYOIL     JAN5    5898   +62.00    5890    5958  313544
  CBOT SOY OIL     DEC4   32.46    +0.40   32.42   33.05    7208
  INDIA PALM OIL   OCT4  465.00    +0.40  460.90  465.50    1410
  INDIA SOYOIL     OCT4  610.60    -3.40  606.60  615.80   74115
  NYMEX CRUDE      NOV4   88.75    -1.98   88.18   91.00   59702

 

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 = 3.250 Malaysian ringgit) 
($1 = 6.1395 Chinese yuan) 
($1 = 61.61 Indian rupees)

Source : REUTERS

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