Malaysian Palm Oil Price Slides to Near 2 and Half Month Low

KUALA LUMPUR: Malaysian palm oil futures fell for a third day on Thursday to a near 2-1/2-month low as estimates of a surge in crude palm oil production in the world’s top growers increased fears that supplies would overwhelm lacklustre demand.

The Malaysian Palm Oil Association (MPOA), a group of planters in the world’s No.2 producer, said it expected total palm output in March to have jumped 27.1 percent to 1.43 million tonnes as yields in both the Peninsular and Borneo regions recovered after monsoon floods.

A median forecast in a Reuters poll had pegged an 18 percent increase in output at 1.32 million tonnes. Official data on Malaysia’s palm output, end-stocks and exports will be released on Friday by industry regulator Malaysian Palm Oil Board.

“MPOA surprised us in terms of the magnitude of the increase,” said David Ng of Phillip Futures in Kuala Lumpur. 

“Production of 1.43 million tonnes is actually very high. A lot of traders are trying to reduce their risky positions – some are short-covering, which pushed the market even lower.”

The benchmark June contract on the Bursa Malaysia Derivatives fell to 2,118 ringgit on Thursday, its lowest since Jan. 30,before settling at 2,120 ringgit ($585) a tonne by the day’s close, down 2.1 percent.

Total traded volume stood at 51,055 lots of 25 tonnes, much hither than the usual 35,000 lots.

In top grower Indonesia, crude palm oil output likely rose 17 percent to 2.397 million tonnes in March, its highest level since September, a Reuters survey of leading industry officials showed. The increase was partly due to more number of available working days on plantations, poll respondents said. 

In other markets, oil prices rallied more than 2 percent on Thursday, clawing back part of a 6 percent slump triggered by a jump in U.S. crude inventories and record Saudi output, although analysts said sentiment remained bearish.

In other competing vegetable oil markets, the U.S. soyoil May contract lost 0.8 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodity Exchange fell 1 percent.

Weaker prices of soyoil, palm’s edible oil rival, may prompt price-sensitive buyers to shift demand to soy instead. 

Palm, soy and crude oil prices at 1027 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      APR5       0    +0.00    2150       0       0
  MY PALM OIL      MAY5    2124   -47.00    2124    2161    2180
  MY PALM OIL      JUN5    2120   -46.00    2118    2160   29918
  CHINA PALM OLEIN SEP5    4656   -58.00    4648    4702  365568
  CHINA SOYOIL     SEP5    5366   -52.00    5360    5406  370920
  CBOT SOY OIL     MAY5   30.67    -4.60   30.67   30.95   10193
  INDIA PALM OIL   APR5  434.00    -4.60  433.70  437.00     868
  INDIA SOYOIL     APR5  599.70    -5.15  599.50  605.50    9765
  NYMEX CRUDE      MAY5   51.79    +1.37   50.86   51.86   36413
  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 = 3.6270 Malaysian ringgit)    
($1 = 6.2060 Chinese yuan)
($1 = 62.23 Indian rupee)
– Reuters

Source : The Star


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