Palm reverses declines on falling supply outlook

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KUALA LUMPUR (Jan 23): Malaysian palm oil futures rose in early trade on Monday, on track to break a losing streak from last week, lifted by concerns about falling production.

Market signals however were mixed, traders said, as prices earlier declined to a one-week low. 

Benchmark palm oil futures for April delivery on the Bursa Malaysia Derivatives Exchange were up 0.1% at 3,104 ringgit (US$699) a tonne at the midday break. The contract earlier fell to 3,089 ringgit, its lowest level since Jan 16.

Traded volumes stood at 10,757 lots of 25 tonnes each at noon.

"There's uncertainty over production trends, despite bullish comments from Karachi over the weekend," said a futures trader from Kuala Lumpur, referring to forecasts from leading analysts at the Pakistan Edible Oils Conference on Saturday. 

"The market is expecting January to be another slow month, with close to double digit declines."     

Palm oil output has declined each month since October, in line with seasonal trends and as fruit yields continue to be hurt by the lingering dry weather impact of El Nino.

Palm oil prices are expected to hit 3,300 ringgit a tonne by early March, while Indonesian output is forecast to range between 33.5-34 million tonnes this year, said leading analyst Dorab Mistry at the conference in Pakistan.  

Palm oil may break support at 3,089 ringgit and fall towards the next support level at 3,014 ringgit, said a Reuters market analyst for commodities and energy technicals.    

In related vegetable oils, the March soybean oil contract on the CBOT was up 0.2%, while the May soybean oil contract on the Dalian Commodity Exchange fell 0.6%.
The May contract for Dalian palm olein fell 0.7%.

Palm prices are usually impacted by movements in prices of related edible oils, as they compete for a share in the global vegetable oils market.     


Palm, soy and crude oil prices at 0510 GMT

Contract Month Last Change Low High Volume
MY PALM OIL FEB7 3235 +1.00 3230 3238 162
MY PALM OIL MAR7 3146 +4.00 3131 3155 1703
MY PALM OIL APR7 3104 +3.00 3089 3115 6063
CHINA PALM OLEIN MAY7 6244 -46.00 6216 6280 284868
CHINA SOYOIL MAY7 6964 -40.00 6944 6998 211792
CBOT SOY OIL MAR7 35.22 +0.07 35.14 35.34 3925
INDIA PALM OIL JAN7 588.60 +0.10 587.00 589.9 56
INDIA SOYOIL FEB7 717.3 +0.15 717 718.3 1210
NYMEX CRUDE MAR7 53.13 -0.09 53.06 53.47 16143

 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
(US$1 = 4.4380 ringgit)
(US$1 = 68.1000 Indian rupees)
(US$1 = 6.8490 Chinese yuan)