Breaking News : Likes our Facebook page and join us as members, you will receive email updates and instant updates in Telegram group.
Breaking News : Likes our Facebook page and join us as members, you will receive email updates and instant updates in Telegram group.
Malaysian palm oil futures edged lower on Wednesday as losses in competing soy markets weighed, although a weak ringgit and concerns about the aftermath of monsoon floods on palm output limited the fall and kept prices rangebound. That may boost supplies of soybean oil, which competes with palm for use in food and fuel. Malaysian palm oil futures fell to their lowest in nearly a week on Tuesday, following losses in U.S. and Chinese soyoil markets, while plunging crude prices stoked concerns about demand for palm from biofuel producers.
Soy markets took a beating late Monday after U.S. Department of Agriculture
data revealed that the record U.S. soybean harvest in 2014 was even bigger than
expected, lifting domestic supplies to eight-year highs, ahead of an anticipated
bumper harvest from South America. Larger supplies of soybeans for crushing could weaken prices of soyoil, arival vegetable oil that typically trades at a premium to palm. Lower soyoil prices may prompt buyers to shift away from palm. The U.S. soyoil contract for March fell as much as 3.2 percent in the overnight Monday session, and was trading at 32.88 cents a pound late Tuesday. The most active May soybean oil contract on the Dalian Commodity Exchange dropped 1.7 percent.
"Palm is weak because competing oils have become cheaper," said a
Singapore-based commodities dealer. The benchmark March contract had eased 0.4 percent to 2,354 ringgit ($655) per tonne by Tuesday's close, after dropping to its lowest since Jan. 7 at 2,324 ringgit. Traders said the weaker Malaysian ringgit should help stoke demand for palm, but export demand still lagged as uncertainty in global markets was making buyers cautious.
“Externally the market is full of uncertainty, with crude oil depressed and most commodities still trading at average lows, including soybean oil,” said a trader with a foreign commodities brokerage in Kuala Lumpur.
“So even with the friendly news of floods leading to production going down, and the weakness in ringgit, people are not rushing to buy because prices are not going to fly.”
According to Rabobank, palm oil prices are expected to improve in 2015, driven by rising demand as well as constrained supplies due to dry weather in 2014. The incremental supply of non-soy oilseeds is expected to remain constrained in 2014-15. Global palm oil production is expected to grow by 1.3m tonnes in 2015, against a 3.6m-tonne increase in 2014, due to dry weather conditions. Stronger demand from emerging economies will support prices as economic prospects improve. Palm oil demand will stay firm relative to supply growth, and is expected to grow by 8% in 2014-15. Soyoil is once again the third wheel of the soybean complex as soymeal retakes the price lead. The combination of soyoil's share of the crush recovering from multi-year lows set in 2014, and low stocks, have given the soyoil market hope for 2015 prices.
The benchmark March contract was down 0.4 percent at 2,344 ringgit ($652) per tonne by Wednesday’s close, with prices trapped is a tight range between 2,328 ringgit and 2,354 ringgit. Total traded volume stood at 66,526 lots of 25 tonnes, nearly double the usual 35,000 lots. Meanwhile, palm oil output in Malaysia may fall further this month as the aftermath of monsoon flooding takes its toll on yields that are already low for seasonal reasons, while growers in Borneo were now braced for the monsoon, which has shifted to that region.
Soy markets came under pressure after a US Department of Agriculture report showed that domestic supplies of soybeans in the United States were at eight-year highs after a bountiful harvest in 2014. Analysts say US soybean processors likely notched their heaviest crush on record in December as they sped up operations to handle huge deliveries, according to a Reuters poll. The US soyoil contract for March was up 0.2 percent late Wednesday after falling to week’s low of 32.41 cents a pound in the previous session, while the most active May soybean oil contract on the Dalian Commodity Exchange dropped 1.2 percent. Abundant supplies of soyoil may channel demand away from palm, a common food and fuel substitute.
The Malaysian ringgit fell to multi-year lows of 3.6020 against the US dollar on Wednesday as crude oil prices continued to slide. Oil prices fell 1 percent on Wednesday after the World Bank cut its economic growth forecast, helping extend a rout that saw prices touch a nearly six-year low the previous session.
No comments:
Post a Comment