Palm rebounds on expectation of slowing monthly production

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KUALA LUMPUR (Feb 28): Malaysian palm oil futures rose on Thursday, recovering from four straight sessions of declines to a near two-month low in the previous session, on expectations of slowing monthly production.

The benchmark palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange was up 0.8% at RM2,149 (US$528.14) a tonne at the midday break.

Palm had slumped 2.5% in intraday trade on Wednesday to RM2,129, its weakest level since Dec 31.

The vegetable oil has declined 6.5% so far this month, in what could be its biggest fall since November 2017.

"The selloff was too deep yesterday," said a Kuala Lumpur-based futures trader while explaining why palm prices trended upward in Thursday's first-half trade.

"But I think it will recover fast, I'm hearing that February's full month production will be down (from the previous month) by 7-10%."

Palm oil output usually declines on a monthly basis in the first quarter of the year, but traders said February output could be higher than a year earlier.

Data from industry regulator the Malaysian Palm Oil Board showed production in January fell 3.9% on month to 1.74 million tonnes. The board is scheduled to release February data on March 11.

Cargo surveyors Intertek Testing Services and AmSpec Agri Malaysia reported on Thursday that exports in February declined 14.5-15.2% from the previous month.

In other related oils, the Chicago March soybean oil contract was last up 0.2%.

The May soyoil contract on the Dalian Commodity Exchange gained 0.3% and the Dalian May palm oil contract was down 0.5%.

Palm oil prices are affected by movements in soyoil, as they compete for a share in the global vegetable oil market.   

Palm oil may bounce to RM2,177 per tonne, as it has stabilised around a support at RM2,130, said Wang Tao, a Reuters market analyst for commodities and energy technicals.

Palm, soy and crude oil prices at 0436 GMT

Contract          Month    Last  Change     Low    High  Volume
MY PALM OIL       MAR9     1940  +20.00    1932    1944     192
MY PALM OIL       APR9     2095  +14.00    2092    2107    2004
MY PALM OIL       MAY9     2149  +17.00    2139    2162    8045
CHINA PALM OLEIN  MAY9     4560  -22.00    4522    4570  245918
CHINA SOYOIL      MAY9     5680  +16.00    5624    5708  255012
CBOT SOY OIL      MAR9    29.86   +0.06   29.86   29.86    1626
INDIA PALM OIL    FEB9   550.20   +0.10  549.80   550.4      96
INDIA SOYOIL      MAR9      757   +0.15     757   758.9     510
NYMEX CRUDE       APR9    56.91   -0.03   56.88   57.04   15972

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 = RM4.0690)
(US$1 = 71.1520 Indian rupees)
(US$1 = 6.6814 Chinese yuan)