Palm oil edges lower December 04, 2013: World News

December 04, 2013

Palm oil
Palm oil

World News: Malaysian palm oil futures ended lower for the third straight day on Tuesday, hurt by weaker-than-expected exports, but prices were held up by prospects that monsoon floods could dent output in the world’s second-largest producer. Rains in the past two days have caused floods in Malaysian oil palm-growing states Johor and Pahang, according to local media reports, with more than a thousand people evacuated so far.

Malaysia’s Meteorological Department has warned that thunderstorms over the states would persist until late Tuesday and could worsen flooding in low-lying areas. Most parts of the country will be wet throughout the monsoon season, it said. Heavy rains and floods complicate palm harvesting and disrupts transportation of fresh fruit bunches to mills. Market participants are expecting output to fall in December, offsetting weaker export demand and keeping stocks in check. “Floods are getting bad, and the daily rain is not helping the oil extraction rates, and it’s not helping to get good crops,” said a trader with a local commodities brokerage.

“There were attempts to break the 2,600 ringgit level but both failed. In the long run, December will not be a month to sell. We don’t have a lot of crude palm oil to go around,” the Malaysia-based trader added. The benchmark February contract on the Bursa Malaysia Derivatives Exchange had inched down 0.9 percent to 2,619 ringgit ($813) per tonne. Prices traded in a range between 2,605-2,645 ringgit.

Total traded volume stood at 39,488 lots of 25 tonnes, above the average 35,000 lots. On the technical front, Malaysian palm oil seems to be consolidating in a small triangle and is expected to rise to 2,670 ringgit per tonne, Reuters market analyst Wang Tao said.

Cargo surveyor data on Monday showed that exports of Malaysian palm oil products fell 4.8-4.9 percent in November compared with October, signalling softer demand for the tropical oil as the northern winter approaches. But higher biodiesel mandates could harden rival soyoil prices next year, and help lift global biofuel demand by an expected minimum of 2.5 million tonnes next year.

Argentina, the world’s top exporter of soyoil-based biodiesel, raised its mandatory mix of biodiesel to 10 percent from 8 percent effective December 1. In other markets, Brent crude rose towards $112 a barrel on Tuesday, just off an 11-week high hit in the previous session, as strong economic data boosted the demand outlook and ongoing outages in Libya maintained concerns about supplies. In competing vegetable oil markets, the US soyoil contract for December was flat percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.9 percent.

Courtesy Reuters

This website uses cookies to improve your experience. We'll assume you're ok with this, but you can opt-out if you wish. Accept Read More