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