Gains in soy, robust exports lift palm to 1-month high

-A +A

KUALA LUMPUR (Sept 15): Malaysian palm oil futures rose to a one-month high on Monday, lifted by gains in U.S. and China soyoil markets and a surge in exports of the tropical oil in the first half of the month.

Overseas shipments of Malaysian palm oil between Sept. 1 and Sept. 15 rose 32 percent to 750,425 tonnes compared with the same period a month ago, data from cargo surveyor Intertek Testing Services showed.

Demand for crude palm oil more then doubled, while imports for palm oil products from Europe and India surged, the data showed. The strong recovery comes after Malaysia removed export taxes for the crude grade for September and October.

Another cargo surveyor Societe Generale de Surveillance reported that exports for the same period rose 34 percent.

"The palm market pulled up today on the back of the U.S. soybean oil which was sharply up over a hundred points on Friday, and also the Dalian which went up further this morning," said a trader with a foreign commodities brokerage.

"Exports are also very good, after the export duty was cut to zero," the Kuala Lumpur-based trader added. "The market is holding very well and going higher - but there's a bit of resistance at 2,150 ringgit."

The benchmark November contract on the Bursa Malaysia Derivatives Exchange rose to 2,124 ringgit in early trading, the highest level since Aug. 15.

The contract later lost steam and settled at 2,099 ringgit ($651) per tonne by the day's close, a 0.7 percent rise, after a leading vegetable oil analyst forecast palm prices to drop over the next few weeks to remain competitive.

Total traded volume stood at 76,335 lots of 25 tonnes, more than double the usual 35,000 lots.      

Technical showed that a bullish target at 2,142 ringgit per tonne remains unchanged for palm oil, as indicated by its wave pattern and a Fibonacci retracement analysis, said Reuters market analyst Wang Tao.    

Palm oil prices should ease towards the tropical oil's production cost of around 1,900 ringgit ($594) over the next few weeks in order to stay competitive and recapture market share from rival vegetable oils, analyst Dorab Mistry said on Monday, as prospects of bigger supplies looms.

Prices, however, will unlikely dip below cost of crude palm oil production, Mistry said at a palm oil seminar in Shanghai.

Vegetable oil imports in the world's biggest edible oil consumer, India, hit a record 1.3 million tonnes in August, lifted by the highest ever soyoil imports of 350,373 tonnes for the month, according to the Solvent Extractors' Association of India on Monday.

Imports of palm rose to 805,131 tonnes, after higher stocks in top producers kept prices attractive.    

The Malaysian ringgit led losses among other emerging Asian currencies on Monday, shedding as much as 1.0 percent to 3.2300 per dollar and making the ringgit-priced feedstock more attractive for overseas buyers and refiners.

Global commodities players, however, are wary of a U.S. Federal Reserve decision on interest rates which may fuel fresh gains in the U.S. currency and weigh on dollar-priced raw materials, adding pressure to many commodity markets already trading near multi-year lows.

In rival vegetable oil markets, the U.S. soyoil contract for December gave up Friday's gains to edge down 0.2 percent in late Asian trade. The most active January soybean oil contract on the Dalian Commodities Exchange rose 1.7 percent.

In other markets, Brent crude oil slumped on Monday to its lowest in more than two years, below $97 per barrel as lacklustre economic data from China, the world's top energy consumer, cast a shadow over the outlook for oil demand at a time of abundant supply.   

Palm, soy and crude oil prices at 1017 GMT

Contract        Month    Last   Change     Low    High  Volume
MY PALM OIL      SEP4    2160   +35.00    2150    2170      34
MY PALM OIL      OCT4    2119   +22.00    2098    2130    1440
MY PALM OIL      NOV4    2099   +15.00    2091    2124   29782
CHINA PALM OLEIN JAN5    5240   +58.00    5182    5260  522472
CHINA SOYOIL     JAN5    6040  +100.00    5956    6050  716630
CBOT SOY OIL     DEC4   32.70    -0.07   32.46   32.92   12551
INDIA SOYOIL     SEP4  627.20    +5.55  622.80  628.50    2165
NYMEX CRUDE      OCT4   91.43    -0.84   90.63   92.37   30171

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 = 3.225 Malaysian ringgit)
($1 = 6.142 Chinese yuan)
($1 = 61.05 Indian rupee)