KUALA LUMPUR (May 13): Malaysian palm oil futures recovered ground on Monday, after earlier hitting a five-and-a-half month low, as industry association data showing shrinking output eased concerns over high inventories and rising production.
The market had fallen earlier on concerns over the U.S.-China trade war and expectations of rising output in the coming months.
Global stocks and commodities markets fell as the United States and China appeared at a deadlock over trade negotiations on Sunday, with Washington demanding promises of concrete changes to Chinese law and Beijing saying it would not swallow any "bitter fruit" that harmed its interests.
The benchmark palm oil contract for July delivery on the Bursa Malaysia Derivatives Exchange was last up 0.1% at 1,985 ringgit (US$476.93) a tonne at the close of trade on Monday, snapping three previous sessions of losses.
The market earlier fell as much as 1.2% to 1,960 ringgit, its lowest levels since Nov 27.
"The market recovered losses due to the Southern Peninsular Palm Oil Millers Association data," said a Kuala Lumpur-based trader, noting the data showed declining output during the first 10 days of May versus the corresponding period last month.
Another trader had said earlier in the day that the occurrence of Ramadan, the Muslim fasting month, could curb output in May as well.
Ramadan, which began on May 5 this year, sees Muslims worldwide fast from dawn to dusk. This slows down productivity in oil palm estates, as many workers are from Muslim-majority Indonesia and work in plantation estates is labour-intensive.
Data from the Malaysian Palm Oil Board showed production in April fell 1.4% from the previous month to 1.65 million tonnes, while inventories fell 6.6% to 2.73 million tonnes.
Palm oil may fall into a range of 1,953-1,967 ringgit per tonne, said Reuters market analyst for commodities and energy technicals Wang Tao.
In related oils, the Chicago July soybean oil contract dropped 1.2%, while the May soyoil contract on the Dalian Commodity Exchange traded flat.
The Dalian May palm oil contract slipped 1%.
Palm oil prices are affected by movements in soyoil, with which it competes for global market share.
Palm, soy and crude oil prices at 1114 GMT
|MY PALM OIL||MAY9||0||+7.00||0||0||0|
|MY PALM OIL||JUN9||1958||+7.00||1930||1959||1412|
|MY PALM OIL||JUL9||1984||+2.00||1960||1986||16446|
|CHINA PALM OLEIN||MAY9||4092||-42.00||4092||4206||230|
|CBOT SOY OIL||JUL9||26.47||-0.32||26.35||26.63||10153|
|INDIA PALM OIL||MAY9||521.00||+2.80||517.50||521||509|
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 = 4.1620 ringgit)
(US$1 = 70.4882 Indian rupees)
(US$1 = 6.8784 Chinese yuan)