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VEGOILS-Palm oil futures gain on U.S. weather woes
July 16, 2012 / 5:53 AM / 5 years ago

VEGOILS-Palm oil futures gain on U.S. weather woes

* Forecasts of more U.S. drought stress support
    * Palm oil to rise to 3,208 ringgit -technicals
    * Traders expect further downgrade of soy crop condition

 (Updates prices)
    By Chew Yee Kiat
    SINGAPORE, July 16 (Reuters) - Malaysian crude palm oil
futures ended Monday higher, as demand prospects brightened
after forecasts of more harsh weather in the United States
threatened to tighten global oilseed supply further.
    Unfavourable weather that could hurt the soybean crop may
lead to a smaller supply of soybean oil, shifting demand to the
cheaper refined palm oil.   
    "One reason for the market rally today is the U.S. weather.
Another reason is the big spread between soybean oil and palm
oil that is more than $200 per tonne," said a trader with a
foreign commodities brokerage in Malaysia.     
    Benchmark October palm oil futures on the Bursa
Malaysia Derivatives Exchange gained 1.7 percent to close at
3,122 ringgit ($981) per tonne, after going as high as 3,161
ringgit.
    Traded volumes stood at 29,738 lots of 25 tonnes each,
higher than the usual 25,000 lots.
    Technicals are also bullish. Reuters market analyst Wang Tao
said palm oil might break above a resistance at 3,168 ringgit,
and rise further to 3,208 ringgit. 
    Traders appeared unfazed by a 21 percent drop in Malaysian
exports for the first 15 days of the month as weather fears
remained in focus. 
    "I don't think exports will affect the market temporarily,
plus the month is not over yet so the market is still waiting
for demand to pick up," the Malaysian trader said. 
    Demand is expected to be supported ahead of a slew of Asian
festivals starting with Ramadan this week and with China and
India celebrating key holidays from September to November.
    Another cargo surveyor, Societe Generale de Surveillance,
will issue export data later on Monday.    
    Drought stress has already dragged soy crop condition
ratings to the lowest point for this time of year since 1988,
and traders are expecting further downgrades in the U.S.
Department of Agriculture's weekly report on Monday. 
    Traders said weather-driven rallies in other vegetable oil
markets also supported palm oil prices. By 1003 GMT, the most
active U.S. soyoil for December delivery gained 1.2 
percent. Th e most active January 2013 soyoil contract on
the Dalian Commodity Exchange closed up 2.8 percent.    
    "Supportive factors such as the U.S. dry weather pushed
prices to new highs. It's hard to say now if prices will
continue to go higher, but declines last week have provided good
upside for Dalian soybean oil," said Huang Zhi Qiang, an analyst
with Guotai Junan Futures in Shanghai.
    Crude oil prices held steady above $102 a barrel on Monday,
supported by weekend comments from China's Premier Wen Jiabao
that the government would step up efforts to boost the economy
of the world's second-largest oil consumer. 
    
  Palm, soy and crude oil prices at 1004 GMT
                                                                        
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG2    3100   +41.00    3093    3139     612
  MY PALM OIL      SEP2    3114   +49.00    3102    3152    5986
  MY PALM OIL      OCT2    3122   +51.00    3109    3161   17710
  CHINA PALM OLEIN JAN3    8252  +242.00    8100    8280  321816
  CHINA SOYOIL     JAN3    9886  +272.00    9720    9906  789272
  CBOT SOY OIL     DEC2   55.18    +0.64   54.78   55.48   12008
  NYMEX CRUDE      AUG2   86.69    -0.41   86.46   87.35   21189
                                                                        
  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
  Crude in U.S. dollars per barrel
        ($1=3.182 Malaysian ringgit)

 (Editing by Ed Lane and)

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