Palm oil at 3-month low on slowing demand, rising supply

-A +A

SINGAPORE (Feb 20): Malaysian palm oil futures slid for a third consecutive session on Monday, falling to its lowest since mid-November as slowing demand and expectations of higher supplies weighed on the market.

Benchmark palm oil futures for May delivery on the Bursa Malaysia Derivatives Exchange finished down 1.1% to RM2,827 (US$634.43) a tonne, the weakest since Nov 15.

Traded volumes stood at 72,604 lots of 25 tonnes.

"There is not much direction for the market as Chicago is closed today," a Kuala Lumpur-based trader said.

"As far as fundamentals are concerned, it is pretty bearish as the output is rising everywhere, Indonesia and Malaysia. Soybean oil is priced competitively against palm oil, so it is getting difficult for palm oil to compete."

The Chicago Board of Trade soybean futures, which often direct movement in palm oil, were closed on Monday for the Presidents Day federal holiday.

In recent weeks, palm oil prices have reached their highest in more than four years as market supplies are tight on low production levels.

Palm's fresh fruit yields are still suffering the effects of a crop-damaging El Nino, but expectations of a recovery by the second-half of the year are weighing on prices, according to industry analysts.

Meanwhile, the demand is slipping.

Exports of Malaysian palm oil products for Feb 1-20 fell 0.8% to 733,288 tonnes from 739,367 tonnes shipped a month ago, cargo surveyor Intertek Testing Services said on Monday.

But another cargo surveyor, Societe Generale de Surveillance said exports during the period rose 1.7% to 745,564 tonnes from 733,002 tonnes shipped during Jan 1-20.

The market may bounce to RM2,914 per tonne, as suggested by its wave pattern, a Fibonacci projection analysis and a falling channel, according to Wang Tao, Reuters market analyst for commodities and energy technicals.

China's Dalian palm olein fell 0.8%.

(US$1 = RM4.456)

Palm, soy and crude oil prices at 1016 GMT

Contract        Month    Last   Change     Low    High  Volume
MY PALM OIL      MAR7    3076   -18.00    3076    3119    1388
MY PALM OIL      APR7    2922   -29.00    2920    2974   12717
MY PALM OIL      MAY7    2827   -32.00    2827    2882   33237
CHINA PALM OLEIN MAY7    5930   -48.00    5888    5950  414222
CHINA SOYOIL     MAY7    6698   -54.00    6672    6718  246048
CBOT SOY OIL     MAR7   32.89    -3.30    0.00    0.00       0
INDIA PALM OIL   FEB7  555.70    -3.30  555.20  561.10     593
INDIA SOYOIL     FEB7  678.35    -0.15  678.05  680.00    2100
NYMEX CRUDE      MAR7   53.83    +0.43   53.35   53.88    3628

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