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VEGOILS-Palm drops ahead of Eid holiday, tighter supplies in focus
August 5, 2013 / 6:14 AM / 4 years ago

VEGOILS-Palm drops ahead of Eid holiday, tighter supplies in focus

* Short covering may kick in later
    * Malaysia July palm stocks seen at 1.6 mln T-Reuters poll

 (Updates prices)
    By Niluksi Koswanage
    KUALA LUMPUR, Aug 5 (Reuters) - Malaysian palm oil futures
slipped on Monday ahead of the Eid al-Fitr holidays later in the
week, although prospects for tighter supplies curbed losses.
    Prices of the world's most traded edible oil have lost more
than 8 percent this year. But the market could see some recovery
as exports rose in July, signalling a decline in stocks.
    A Reuters poll showed stocks in Malaysia, the second largest
producer, could fall to 1.6 million tonnes in July -- below a
two-year low of 1.65 million tonnes hit in June. 
    "The declines are muted but people don't want to take the
risk of completely selling down," said a trader with a foreign
commodities brokerage in Kuala Lumpur.
    "We could see short covering kick in later as tight supplies
in palm oil hover over us and global agricultural markets are
still open during Eid," he added.
    The benchmark October contract on the Bursa
Malaysia Derivatives Exchange closed down 0.9 percent to 2,238
ringgit ($690) per tonne. 
    Total traded volume stood at 21,765 lots of 25 tonnes each,
below the average 17,500 lots.  
    The Bursa Malaysia market will be closed from the second
half of Wednesday and will reopen again on Monday, Aug. 12.
Markets in Indonesia, the world's largest palm oil producer, are
closed this week. 
    Reuters analyst Wang Tao said a bearish target at 2,221
ringgit per tonne remained unchanged for palm oil, as it failed
to break resistance at 2,272 ringgit. 
    Forecasts of crop friendly weather across the U.S. Midwest
have fanned concerns of bumper crops in other agricultural
markets from wheat to corn, including soybeans that Malaysian
palm oil prices track.
    A bumper soybean crop could yield more soyoil supplies,
narrowing its premium to palm oil and grabbing demand. 
    The U.S. soyoil contract for December edged down in
late Asian trade after sharp falls last week. The most-active
January soybean oil contract on the Dalian Commodities
Exchange dropped 0.5 percent.
    In other markets, Brent crude rose above $109 a barrel on
Monday on supply outages and after promising China data, but
investors were cautious after Iran and the United States both
signalled a will to improve relations. 
  Palm, soy and crude oil prices at 1005 GMT
                                                                             
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      AUG3    2310   +14.00    2310    2325      36
  MY PALM OIL      SEP3    2271    -5.00    2258    2287    1763
  MY PALM OIL      OCT3    2238   -20.00    2233    2262   11922
  CHINA PALM OLEIN JAN4    5446   -24.00    5434    5486  336382
  CHINA SOYOIL     JAN4    6994   -36.00    6978    7040  586874
  CBOT SOY OIL     DEC3   42.78    -0.04   42.65   42.90    4142
  NYMEX CRUDE      SEP3  106.37    -0.57  106.01  107.69   27717
                                                                             
  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 = 3.2575 Malaysian ringgit)

 (Editing by Joseph Radford and Himani Sarkar)

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