Palm falls to one-week low amid oversupply concerns

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KUALA LUMPUR (Jan 11): Malaysian palm oil futures fell to a one-week low at the midday break on Friday, heading for a second day of decline, hurt by concerns about oversupply and an overnight weakness in soyoil on the Chicago Board of Trade (CBOT).  

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 0.2% to RM2,158 (US$527.11) a tonne at noon.

It earlier fell to RM2,146, its lowest since Jan 4, and is down 0.6% for the week so far.

Trading volumes stood at 9,474 lots of 25 tonnes each at the midday break.

"Production is not slowing down by that much," said a Kuala Lumpur-based trader, citing data released by industry regulator the Malaysian Palm Oil Board (MPOB) on Thursday.

The MPOB data showed Malaysian end-stocks in December rose 6.9% from the previous month to 3.21 million tonnes, the highest in at least 19 years, according to Refinitiv Eikon data.

December production fell 2% from the previous month to 1.81 million tonnes while exports edged up 0.6% from November to 1.38 million tonnes, according to the data.

A Reuters survey had forecast palm oil's end-December stockpiles to edge up 4.3% to 3.14 million tonnes, while production was seen falling 3.6% to 1.78 million tonnes. Exports were also forecast to gain 4.7% to 1.44 million tonnes.

Another futures trader in Kuala Lumpur said that weaker overnight soyoil prices contributed to Friday's fall in palm contract. Palm oil prices are impacted by changes in those of soyoil, as they compete for a share in the global vegetable oil market.  

The Chicago March soybean oil contract fell 1.4% on Thursday, but was last up 0.5% on Friday.

In other related oils, the March soybean oil contract on the Dalian Commodity Exchange fell 0.5%, and the Dalian January palm oil contract rose 0.4%.

Palm oil may break a support at RM2,150 per tonne, and fall to the next support at RM2,121, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Palm, soy and crude oil prices at 0456 GMT:

Contract          Month    Last  Change     Low    High  Volume
MY PALM OIL       JAN9        0   +0.00 0 0 0
MY PALM OIL       FEB9     2110   -7.00    2103    2113    1200
MY PALM OIL       MAR9     2158   -5.00    2146    2162    4039
CHINA PALM OLEIN  JAN9     4390  +18.00    4390    4390       8
CHINA SOYOIL      JAN9     5130  +30.00    5100    5200     676
CBOT SOY OIL      JAN9    27.94   +0.00  0 0 0
INDIA PALM OIL    JAN9   542.00   +1.60  540.70   542.6     114
INDIA SOYOIL      JAN9    761.5   +0.10     760   764.5    1110
NYMEX CRUDE       FEB9    52.46   -0.13   52.14   52.55   29488

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US 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 US dollars per barrel

(US$1 = RM4.0940)
(US$1 = 70.3710 Indian rupees)
(US$1 = 6.7491 Chinese yuan)