Palm oil in sharpest fall in 2 weeks on bearish data

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KUALA LUMPUR (Jan 10): Malaysian palm oil futures declined at their sharpest daily rate in two weeks by the end of trade on Thursday, snapping two sessions of gains, on bearish official data on December inventories, production and exports.  

The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange fell 0.9% to 2,163 ringgit (US$528.21) a tonne at the close of trade, its biggest daily decline since Dec 26 and coming off a near three-week high it hit in the previous trading session.

It earlier fell as much as 1.5% to an intraday low of 2,150 ringgit.     

Trading volumes stood at 35,351 lots of 25 tonnes each at the end of the trading day. 

Data from industry regulator the Malaysian Palm Oil Board (MPOB), released after the market paused for the midday break, showed end-stocks rising 6.9% from the previous month to 3.21 million tonnes. 

Inventory levels are at their highest in at least 19 years, according to Refinitiv Eikon data. 

Meanwhile, 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 MPOB data.

"Exports came in lower than expected and with high imports, stocks are above our estimates, which is considered bearish," said a Kuala Lumpur-based trader.

Another trader also said the decline in December's production was lower than expected.

A Reuters survey had forecast palm oil's end-December stockpiles edging 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.

Palm oil may fall to 2,150 ringgit per tonne, as it failed again to break a resistance at 2,198 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

In other related oils, the Chicago March soybean oil contract was down 0.03%, while the March soybean oil contract on the Dalian Commodity Exchange fell 0.2%. 

Meanwhile, the Dalian January palm oil contract rose 1.2%.

Palm oil prices are impacted by changes in soyoil prices, as they compete for a share in the global vegetable oil market.  
           
Palm, soy and crude oil prices at 1050 GMT:

 Contract          Month    Last  Change     Low    High  Volume
 MY PALM OIL       JAN9     2118  +14.00    2118    2118       2
 MY PALM OIL       FEB9     2118  -16.00    2105    2141     907
 MY PALM OIL       MAR9     2164  -18.00    2150    2188   15365
 CHINA PALM OLEIN  JAN9     4342  +50.00    4342    4390    1268
 CHINA SOYOIL      JAN9        0   +0.00       0       0       0
 CBOT SOY OIL      JAN9    28.32   +0.00       0       0       9
 INDIA PALM OIL    JAN9   540.20   -0.20  536.50   543.9     832
 INDIA SOYOIL      JAN9    761.9   +1.65   756.5  763.95    6740
 NYMEX CRUDE       FEB9    52.09   -0.27   51.45   52.23  173896
  
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
 
(US$1 = 4.0950 ringgit)
(US$1 = 70.5200 Indian rupees)
(US$1 = 6.7879 Chinese yuan)