Palm retreats on expectation of production rebound

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KUALA LUMPUR (April 6): Malaysian palm oil futures fell on Thursday, retreating from a one-week high reached in the previous session, on expectation of a production rebound.

Also, weighing on the market was Ramadan demand which is yet to show any signs of a pick-up. The month-long festival sees Muslims in regions such as India and the Middle East consume more palm oil as they break day-long fasts with meals and feasting.

The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange was down 0.3% at RM2,706 (US$610.28) a tonne at the midday break.

On Wednesday, it clocked up its biggest single-session gain in more than five months, tracking rival edible oils and on a bullish export outlook for April due to Ramadan demand.

Traded volumes stood at 20,139 lots of 25 tonnes each at Thursday noon.

"The market spiked yesterday due to soyoil, I don't think it can follow through today because of demand," said a trader from Kuala Lumpur.

"We're seeing some demand for Ramadan requirement, but it's been the same as it was a few weeks ago. Buyers are not really chasing yet."

Palm oil output in the world's No.2 producer Malaysia likely jumped 10.4% to 1.39 million tonnes in March, marking the first month-on-month climb in about five months, a Reuters poll showed.

March end-stocks likely rose 0.1% to 1.46 million tonnes, while exports were seen rising 7% to 1.18 million  tonnes. Official data will be released by the Malaysian Palm Oil Board on April 10.

Palm oil is expected to gain more into a range of RM2,739-2,762 per tonne, according to a Reuters market analyst for commodities and energy technicals.

Palm oil is impacted by the price movements in related edible oils, including soyoil, as they compete for a share in the global vegetable oils market.

Soybean oil on the Chicago Board of Trade fell 0.1%, while the September soybean oil contract on the Dalian Commodity Exchange rose 0.3%.

In other related vegetable oils, the September contract for palm olein on the Dalian Commodity Exchange was up 1.3%.

Palm, soy and crude oil prices at 0628 GMT

Contract          Month    Last  Change     Low   High   Volume
MY PALM OIL       APR7     2920  -10.00    2915   2930       70
MY PALM OIL       MAY7     2822  -11.00    2820   2839      846
MY PALM OIL       JUN7     2706   -8.00    2700   2716     7787
CHINA PALM OLEIN  SEP7     5418  +68.00    5380   5434   428594
CHINA SOYOIL      SEP7     6034  +16.00    6018   6080   346794
CBOT SOY OIL      MAY7     31.8   -0.03   31.75  32.01     3314
INDIA PALM OIL    APR7   524.30   +0.50  523.80  525.9      237
INDIA SOYOIL      APR7    641.5   +1.05   640.3  642.2     2970
NYMEX CRUDE       MAY7    50.93   -0.22   50.77  51.00    20002

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 = RM4.4340)
(US$1 = 64.9800 Indian rupees)
(US$1 = 6.8987 Chinese yuan)