Palm oil at six-month low on rising output, inventories

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KUALA LUMPUR (April 10): Malaysian palm oil futures ended the trading day on Monday at their lowest in six months, weighed down by higher than expected production and end-stocks data from an industry regulator.     

Data from the Malaysian Palm Oil Board (MPOB) showed end-stocks for March rose 6.5% from February to 1.55 million tonnes. Output surged 16.3% to 1.46 million tonnes, the first monthly gain since September and the strongest month-on-month rise in over a year.

Both output and inventories data outpaced market expectations, which had been for stocks to rise 0.1% and production to climb 10.4%, according to a Reuters poll.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was down 2.5% at RM2,593 (US$584.93) a tonne at the close of trade, its weakest level since Oct. 11.

Traded volumes stood at 63,036 lots of 25 tonnes each in the evening.

"Palm's decline is mainly on MPOB, which showed much higher end-stocks and high imports," said a futures trader from Kuala Lumpur.

The MPOB data also showed that exports rose 14.3% to 1.27 million tonnes and imports tripled.     

Concerns of rising output weighed on the market despite data indicating an improvement in demand. Palm oil shipments from Malaysia, the world's second-biggest producer of the tropical oil, soared 20.9% during the first 10 days of April compared with last month, showed data from cargo surveyor Intertek Testing Services.

Another cargo surveyor, Societe Generale de Surveillance, showed exports rose 24.8% in the same period.

Price movements in related edible oils, including soyoil, have an impact on palm oil, as they compete for a share in the global vegetable oils market. Soybean oil on the Chicago Board of Trade dropped 1%.

In other related vegetable oils, the September soybean oil contract on the Dalian Commodity Exchange fell 0.1%, while the September contract for palm olein on the Dalian Commodity Exchange slid 2.7%.

Palm, soy and crude oil prices at 1037 GMT

Contract        Month    Last   Change     Low    High   Volume
MY PALM OIL     APR7     2833   -53.00    2828    2871      316
MY PALM OIL     MAY7     2686   -70.00    2685    2746     3480
MY PALM OIL     JUN7     2592   -67.00    2592    2681    27039
CHINA PALM OLEIN     SEP7     5226  -142.00    5220    5448  1136852
CHINA SOYOIL    SEP7     5968    -4.00    5940    6044   765434
CBOT SOY OIL    MAY7    31.32    -0.30   31.31    31.8     8824
INDIA PALM OIL  APR7   513.70    -8.00  513.20     520     1613
INDIA SOYOIL    APR7    632.8    -3.10   632.1  634.75     6120
NYMEX CRUDE     MAY7    52.57    +0.33   52.29   52.68    91958

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 = RM4.4330)
(US$1 = 64.5300 Indian rupees)
(US$1 = 6.9020 Chinese yuan)