Palm drops tracking rival oils, seen range-bound

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KUALA LUMPUR (March 21): Malaysian palm oil futures fell on Tuesday, hitting their lowest in three sessions and in line for a second straight day of losses, as related edible oils weakened and demand slowed.

However, the market is seen trading range-bound as output for March could be weaker than expected, traders said.     

Benchmark palm oil futures for June delivery on the Bursa Malaysia Derivatives Exchange were down 0.3% at RM2,772 (US$626.16) a tonne at the midday break.

Traded volumes stood at 20,085 lots of 25 tonnes each at the midday break on Tuesday.

"The market has both positive and negative factors keeping it in range, and uncertain on which way to break out," said a futures trader in Kuala Lumpur, referring to the stronger ringgit as an additional factor for the market's decline.

A stronger ringgit, palm's traded currency, usually makes the tropical oil more expensive for foreign-currency holders. The ringgit has gained 0.5% against the dollar since last week.

Palm oil exports from Malaysia, the world's second largest producer of the tropical oil, fell between March 1-20 compared with the same period a month ago. Cargo surveyor Intertek Testing Services reported a 3% drop, while Societe Generale de Surveillance saw a 7.9% decline.

Malaysian output fell 1.4% in February on-month, while end-stocks declined 5.3% to 1.46 million tonnes.

Palm oil remains neutral in a range of RM2,767-2,810 per tonne, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Palm also tracks the movement of other related vegetable oils, as they compete for a share in the global edible oils market.

Soybean oil on the Chicago Board of Trade slid 0.2%, while the September soybean oil contract on the Dalian Commodity Exchange fell 0.6%.

The September contract for palm olein on the Dalian Commodity Exchange dropped 0.5%.

Palm, soy and crude oil prices at 0505 GMT

Contract          Month    Last  Change     Low   High   Volume
MY PALM OIL       APR7     2944   +5.00    2924   2949       32
MY PALM OIL       MAY7     2840   -3.00    2818   2845     1802
MY PALM OIL       JUN7     2772   -8.00    2754   2778    10650
CHINA PALM OLEIN  SEP7     5594  -28.00    5570   5668   345300
CHINA SOYOIL      SEP7     6474  -38.00    6460   6550   317670
CBOT SOY OIL      MAY7    32.67   -0.07   32.59  32.95     8022
INDIA PALM OIL    MAR7   532.60   -0.70  532.00  533.8      156
INDIA SOYOIL      APR7    646.2   -2.25   645.8  646.9     2710
NYMEX CRUDE       APR7    48.36   +0.14   47.93  48.42     1066

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 = RM4.4270)
(US$1 = 65.3900 Indian rupees)
(US$1 = 6.9052 Chinese yuan)