April 30, 2014
Malaysian palm oil futures eased to one-week lows on Tuesday, as traders booked profits after strong gains in the previous session and as comparative vegetable oils weighed on sentiment. The US soyoil contract for July reversed earlier falls to gain 0.1 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange traded 0.4 percent lower. Palm typically tracks the rival commodity as both vegetable oils are common food and fuel substitutes.
“We are in a very tight trading range,” said a trader with a foreign commodities brokerage. “There is no fresh incentive in palm markets, we are lower due to tracking movements in soy.” By the close, the benchmark July contract on the Bursa Malaysia Derivatives Exchange fell 1.3 percent to end at 2,638 ringgit ($810) per tonne, after earlier touching a low of 2,635 ringgit.
Total traded volumes were thin at 30,550 lots of 25 tonnes, against the average 35,000 lots. Palm prices hit a near one-week high on Monday at 2,685 ringgit, as positive export data late last week fuelled optimism of a recovery in demand for the tropical oil. “Chinese imports have been quite bad,” the trader added. “There is a credit squeeze because buyers find it hard to get credit.”
Technicals showed that Malaysian palm oil may drop to its April 21 low of 2,612 ringgit per tonne, as indicated by a wedge, said Reuters market analyst Wang Tao. “This week, the releases of China Manufacturing Purchasing Managers’ Index coupled with the Federal Open Market Committee meeting are expected to cause some turbulence in the palm oil markets,” Phillip Futures said in a note. In related news, Indonesian conglomerate PT Astra International reported late on Monday a 10 percent rise in first-quarter net profit, partially lifted by a rise in palm oil prices.