January 17, 2018 / 5:50 AM / 6 months ago

VEGOILS-Palm slumps to 3-week low on firm ringgit, weak demand

    * Palm down 1.5 pct at noon, heads for 2nd session of
    * Market also cautious over EU vote, weak related oils -
    * Palm may stabilise around 2,491 ringgit/tonne - Technicals

    By Emily Chow
    KUALA LUMPUR, Jan 17 (Reuters) - Malaysian palm oil futures
slumped to a three-week low on Wednesday as a firmer ringgit
 and weak demand weighed on the market. 
    The benchmark palm oil contract for April delivery
on the Bursa Malaysia Derivatives Exchange was down 1.5 percent
at 2,480 ringgit ($628.17) a tonne at the midday break, heading
for a second straight session of decline.
    Earlier in the session, it dropped as much as 1.6 percent to
2,479 ringgit, the weakest since Dec. 26. 
    Trading volumes stood at 22,584 lots of 25 tonnes each at
the midday break.
    "The market is down on lack of demand, causing stocks to
remain high," said a trader from Kuala Lumpur. "The stronger
ringgit has also impacted demand, putting us at uncompetitive
levels again."
    Gains in the ringgit, palm oil's traded currency, typically
make the vegetable oil more expensive for holders of foreign
    The ringgit hit a fresh 18-month high on Wednesday morning
at 3.9410 per dollar, and was last up 0.2 percent at 3.9480.
    Palm oil inventories in Malaysia rose to a more than
two-year high of 2.7 million tonnes at end-December, up 7
percent on month, as demand remained weak. MYPOMS-TPO
    Shipments from Malaysia declined in the first half of
January from a month earlier, showed cargo surveyor data.
Intertek Testing services reported a 7.4 percent drop, while
Societe Generale de Surveillance showed a 2.8 percent fall.

    Another trader said the market is also expected to be
cautious ahead of a European Union vote to curb palm oil
    Europe is Malaysia's second-largest export market, but the
European Parliament backed a call last April for greater vetting
of palm and other vegetable oils used in biofuels in an effort
to prevent the EU's post-2020 renewable transport targets from
leading to deforestation.    
    A large portion of Europe's palm oil imports is used to make
biofuels. The EU Parliament is set to vote on the proposal on
    Continued appreciation in the ringgit and listless competing
vegetable oils may also weigh on the market and hamper any
recovery, he said. 
    In other related edible oils, the March soybean oil contract
 on the Chicago Board of Trade fell 0.4 percent, while
the May soybean oil on the Dalian Commodity Exchange was
down 0.3 percent. 
    The Dalian May palm oil contract declined 0.4
    Palm oil tracks the performance of other edible oils, as
they compete for a share in the global vegetable oils market.
    Palm oil may stabilise around a support at 2,491 ringgit per
tonne, and then bounce towards a resistance at 2,555 ringgit,
said Wang Tao, a Reuters market analyst for commodities and
energy technicals.
    Palm, soy and crude oil prices as of 0514 GMT
 Contract          Month    Last  Change     Low    High  Volume
 MY PALM OIL       FEB8     2475  -29.00    2474    2493     102
 MY PALM OIL       MAR8     2477  -38.00    2477    2511    1523
 MY PALM OIL       APR8     2480  -38.00    2479    2514   10637
 CHINA PALM OLEIN  MAY8     5214  -22.00    5210    5240  176574
 CHINA SOYOIL      MAY8     5720  -18.00    5712    5764  213120
 CBOT SOY OIL      MAR8    32.67   -0.12   32.67   32.83    3461
 INDIA PALM OIL    JAN8   554.80   -2.90  554.80     556     161
 INDIA SOYOIL      JAN8      740   -2.10     740   740.1      80
 NYMEX CRUDE       FEB8    63.61   -0.12   63.57   63.96   19882
  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
  India soy oil in Indian rupee per 10 kg
  Crude in U.S. dollars per barrel
($1 = 3.9480 ringgit)
($1 = 63.9150 Indian rupees)
($1 = 6.4301 Chinese yuan)  

 (Reporting by Emily Chow; Editing by Subhranshu Sahu)
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