Malaysian palm oil price drops as Feb output estimate beats expectations

KUALA LUMPUR: Malaysian palm oil futures fell to a near two-week low on Monday, after planters’ estimates showed steady palm output in the second largest producer, countering expectation of a fall.

    The impetus for foreign buying from a weaker ringgit was offset by losses in crude and soyoil markets, traders said.

    The Malaysian Palm Oil Association, a group of growers, forecast that total February crude palm oil output in the key palm exporter at 1.16 million tonnes, unchanged from January, as poor yields from Borneo regions were compensated by robust growth in Peninsular Malaysia. 

    Borneo’s top growing palm states Sabah and Sarawak make up about half of Malaysia’s total palm production. 

    The estimates are against market expectations for output to drop 3 percent to 1.13 million tonnes – the weakest in four years – after monsoon floods hindered harvesting and the Lunar holidays in mid-February cut the number of harvesting days. 

    “The growers’ full month estimates for February are slightly above market estimates, which means that there was really good production even though it was a short month,” said a trader with a foreign commodities brokerage in Kuala Lumpur. 

    “With that, people are anticipating the same rising production growth to continue in March also,” the trader added. Official data from the Malaysian Palm Oil Board will be released on Tuesday.     

    The benchmark May contract on the Bursa Malaysia Derivatives Exchange closed down 0.7 percent at 2,269 ringgit ($617) a tonne, after touching 2,253 ringgit in late trade, their lowest since Feb. 25.    

    Total traded volume stood at 56,365 lots of 25 tonnes, much higher than the usual 35,000 lots. 

    The trader added that there were also rumours of weaker export data between March 1-10, ahead of cargo surveyor data also due Tuesday.

      Robust U.S. jobs data late last week also helped the dollar soar to an 11-1/2 year peak against a group of currencies, pushing the ringgit down 1.0 percent to 3.6900 against the greenback – its weakest since March 2009. 

    While that made the ringgit-priced palm feedstock cheaper for overseas buyers, the gains in the dollar hurt commodities denominated in the currency such as crude oil.        

    Brent crude oil fell towards $59 a barrel on Monday as the dollar strengthened and a supply glut pushed global oil inventories to record highs.   

    In competing vegetable oil markets, the most active May soybean oil contract on the Dalian Commodity Exchange fell 0.3 percent in late Asian trade. The U.S. soyoil contract for May was nearly flat. 

    Cheaper crude and soyoil prices, typically tracked by palm, could shift food and fuel demand away from the tropical oil.     

  Palm, soy and crude oil prices at 1037 GMT


  Contract        Month    Last   Change     Low    High  Volume

  MY PALM OIL      MAR5    2294   -32.00    2274    2348       6

  MY PALM OIL      APR5    2270   -19.00    2255    2305    2088

  MY PALM OIL      MAY5    2269   -17.00    2253    2312   34821

  CHINA PALM OLEIN SEP5    4814   -48.00    4760    4834  297770

  CHINA SOYOIL     SEP5    5520   -14.00    5466    5532  371016

  CBOT SOY OIL     MAY5   31.29    -2.30   31.16   31.44    4262

  INDIA PALM OIL   MAR5  452.70    -2.30  450.40  458.00    2257

  INDIA SOYOIL     APR5  580.40    -0.60  579.10  583.90   12225

  NYMEX CRUDE      APR5   49.68    +0.07   49.32   49.89   23687


  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 = 3.6770 Malaysian ringgit)    

($1 = 6.2644 Chinese yuan)

($1 = 62.58 Indian rupee)

– Reuters

Source : The Star


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