Palm oil recovers September 18, 2013

September 18, 2013

Palm oil climbs
Palm oil climbs

Malaysian palm oil futures ended higher on Tuesday, recovering from a near one-month low hit earlier in the session, as overseas soy markets improved and strong exports in the first half of September lifted investor sentiment. A stronger ringgit however made the feedstock more expensive for overseas refiners, keeping a lid on gains for the tropical oil.

“Exports are good and that helped the market a bit,” said a trader with a foreign commodities brokerage. “Overseas markets also recovered during today’s trading, so the palm market recovered some of its losses. But prices are still in range trading between 2,270-2,370 ringgit.” The benchmark December palm oil contract on the Bursa Malaysia Derivatives Exchange ended up 0.3 percent at 2,353 ringgit ($724) per tonne. Total traded volumes were 44,037 lots of 25 tonnes each, higher than the usual 35,000 lots.

Palm oil prices earlier fell to 2,294 ringgit, their lowest since August 20, tracking a drop in US soybean prices over the past two days triggered by forecasts for crop friendly rains. US soy recovered on Tuesday on bargain hunting. Larger supplies of soybeans for crushing into soyoil could tighten competition for rival palm oil and depress its prices which have already lost 3.5 percent so far this year.

Technicals show signals are mixed for Malaysian palm oil, as it is not clear if a rebound from the September 13 low of 2,306 ringgit has completed, Reuters market analyst Wang Tao said. Palm oil prices got a boost in the afternoon session from data showing strong export demand. Data from cargo surveyor Intertek Testing Services showed exports of Malaysian palm oil products rose 13.6 percent compared to August 1-15, due to higher purchases of crude palm oil and palm fatty acid distillates.

Another cargo surveyor Societe Generale de Surveillance showed exports rose 12.4 percent for the same period. Malaysia, the world’s No.2 palm oil producer, has decided to keep its crude palm oil export tax for October at 4.5 percent, a government circular showed early Tuesday. The rate has been left unchanged since March. In vegetable oil markets, the US soyoil contract for December eased 0.3 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange edged down 0.1 percent. Courtesy Reuters

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