Palm rebounds from over 1-wk low on weaker ringgit

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KUALA LUMPUR (Sept 23): Malaysian palm oil futures bounced back on Tuesday after hitting a more than one-week low in the previous session, as a recovery in overseas soy markets and a weaker ringgit lifted the tropical oil.

Firm export data from Malaysia, the world's No.2 palm grower, also supported.

Overseas sales of Malaysian palm oil products were 21-26 percent higher for the Sept 1-20 period, compared with a month earlier, cargo surveyor data showed, thanks to buoyant imports of crude palm oil.

The Malaysian currency fell 0.14 percent in early trade and was trading at 3.2470 per dollar late Tuesday, making the ringgit-priced palm feedstock cheaper for overseas investors and refiners, compared with other dollar-priced edible oils.

"The ringgit is weakening, and the Dalian is marginally higher," said a trader with a foreign commodities brokerage in Malaysia.

"Local sentiment is actually good — exports are good. But for external factors, grains are looking very weak. So, you have a mixed market," the trader added. He expects palm prices to be range-bound, with an immediate support level at 2,070 ringgit and resistance at 2,150 ringgit.   

The benchmark December contract on the Bursa Malaysia Derivatives Exchange ended up 1.9 percent at 2,130 ringgit ($657) per tonne, trading in a
2,097 ringgit to 2,132 ringgit range. On Monday, the contract fell to 2064 ringgit — the lowest level since Sept 12.

Total traded volume stood at 52,876 lots of 25 tonnes each on Tuesday, much higher than the usual 35,000 lots.   

In competing vegetable oil markets tracked by palm, the U.S. soyoil contract for December rose 1.3 percent in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange edged down 0.2 percent.  

Technicals showed palm oil has found support at 2,060 ringgit per tonne and may consolidate above this level and below resistance at 2,150 ringgit for one or more days, said Reuters market analyst Wang Tao.    

"The rebound from 1,914 ringgit has ended around 2,150 ringgit, and will be partially or totally reversed by the correction from the Sept 18 high of 2,173 ringgit," added Tao.

Anxiety over the prospect of bumper supplies of rival edible oils from the United States and South America, however, lingered, curbing gains in palm prices.

U.S. soybean futures hit a four-year low, after the Department of Agriculture said the maturity of this season's crop was above market expectations.

The Chicago Board Of Trade front-month soybeans was trading at $9.43 a bushel at 1037 GMT. Earlier, the contract fell to $9.31 — the lowest level since 2010.

Higher supplies of soybeans for crushing would weaken soyoil prices and erode palm's discount to the competing vegetable oil, potentially shifting food and fuel demand away from palm.

Leading industry analyst Dorab Mistry warned earlier this month that as record supplies loom, palm oil prices should ease towards 1,900 ringgit over the next few weeks, to stay competitive and recapture market share from competing oils.

In other markets, Brent crude rose above $97 a barrel on Tuesday as the United States and several Gulf Arab allies launched strikes against Islamic State strongholds in Syria, and as a surprise pick-up in China's factory activity boosted the demand outlook.    

Palm, soy and crude oil prices at 1012 GMT

Contract        Month    Last   Change     Low    High  Volume
MY PALM OIL      OCT4    2152   +29.00    2125    2155     771
MY PALM OIL      NOV4    2134   +41.00    2100    2134    4641
MY PALM OIL      DEC4    2130   +39.00    2097    2132   28223
CHINA PALM OLEIN JAN5    5116   -18.00    5036    5138 1180588
CHINA SOYOIL     JAN5    5830   -10.00    5790    5868  442852
CBOT SOY OIL     DEC4   32.54    +5.70   31.95   32.56    7123
INDIA PALM OIL   SEP4  464.00    +5.70  460.80  465.40     484
INDIA SOYOIL     OCT4  601.00    +8.80  594.70  601.80   47280
NYMEX CRUDE      NOV4   91.37    +0.50   90.58   91.48   21699

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

($1 = 3.244 Malaysian ringgit)
($1 = 6.1378 Chinese yuan)
($1 = 60.95 Indian rupees)

(Update 2: Tues 23/09/14 18:41:31)