Malaysian Palm Oil Price Down on Concerns Over Increased Production

JAKARTA: Malaysian palm oil futures edged lower on Wednesday as worries over increased production and a stronger ringgit dampened buying.

“Strong growth in March and April production is seen as a bearish factor.

The March Southern Palm Oil Millers Association figures released today showed and increase of a whopping 48 percent,” a trader with a local commodities brokerage in Kuala Lumpur said.

By the day’s close, the benchmark June contract on Bursa Malaysia Derivatives was down 0.51 percent at 2,152 ringgit ($582) a tonne. Total traded volume stood at 29,973 lots of 25 tonnes, below the average 35,000 lots.

“The SPOMA figures are having an impact. In April onwards, seasonal production will pick up, hence the outlook is weaker for the rest of the year,” a second trader with a foreign commodities brokerage in Kuala Lumpur said.

Increased production without matching demand can lead to an abundance of palm oil in the market and drive down prices.

Prices also came under pressure from gains in the ringgit, which can curb interest from overseas buyers on the Malaysian market by making palm oil effectively more expensive. 

Indonesia, the world’s biggest producer of palm oil, will extend a 2011 ban on forest clearing beyond its May 2015 deadline, a government official said on Wednesday. 

Technical charts show that palm oil is expected to test support at 2,146 ringgit per tonne, a break below which will lead to a further loss to 2,106 ringgit, Reuters market analyst Wang Tao said. 

Brent crude oil futures slipped below $55 a barrel on Wednesday on speculation that a last-minute deal over Iran’s nuclear programme would be reached, opening the way for more Iranian crude to come into world markets. 

Palm, soy and crude oil prices at 1030 GMT
 Contract        Month    Last   Change     Low    High  Volume
 MY PALM OIL      APR5       0    +0.00       0    2142       0
 MY PALM OIL      MAY5    2160    -9.00    2154    2184    3331
 MY PALM OIL      JUN5    2154   -11.00    2148    2180   17119
 CHINA PALM OLEIN SEP5    4650   -10.00    4620    4696  398886
 CHINA SOYOIL     SEP5    5360   -12.00    5326    5404  548278
 CBOT SOY OIL     MAY5   30.49    -1.80   30.39   30.73    6178
 INDIA PALM OIL   APR5  433.20    -1.80  432.60  437.10     984
 INDIA SOYOIL     APR5  587.30    +3.70  584.90  589.00   19520
 NYMEX CRUDE      MAY5   47.23    -0.37   47.05   47.80   35428
 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 = 3.6975 ringgit)
($1 = 6.1976 Chinese yuan)
($1 = 62.3150 Indian rupees)- Reuters

Source : The Star


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