Palm takes breather after five-month highs

November 17th, 2011

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Category: Uncategorized

(Reuters) - Malaysian palm oil futures
touched a five month peak before turning negative on Thursday,
as investors booked profits after prices were boosted by robust
demand and investor expectations of lower production in key
Asian planters.
 Benchmark January palm oil futures on the
Bursa Malaysia Derivatives Exchange closed 0.9 percent lower at
3,212 Malaysian ringgit ($1,019) per tonne. Prices earlier
touched a peak at 3,268 ringgit, a level not seen since June 15.
 Traded volumes for the January palm contract were at a near
two-month high at 22,387 lots of 25 tonnes each, compared with
19,326 lots on Wednesday.
 "A kind of choppy trading day after a recent good run up,"
said a Kuala Lumpur based trader. "You tend to have some kind of
profit taking, consolidation or a even little breather before it
moves higher."
 "Technically a correction or consolidation is needed in
order to move higher," he added.
 Benchmark palm prices have surged about 17 percent since
lows below 2,800 ringgit hit in early October, and many traders
are bullish on the fourth quarter outlook.
 Sentiment is improving due to lower production expectations
from the fourth quarter, as dominant producers in Indonesia and
Malaysia enter the rainy season and the La Nina weather pattern
is seen returning.
 A weak-to-moderate La Nina weather pattern will trigger
severe monsoon rains in Malaysia's key oil palm growing regions,
the weather office said on Thursday, potentially disrupting the
harvest and boosting prices.

 Palm oil demand is seen rising in top buyers China and
India. Exports of Malaysian palm oil products for Nov 1-15 rose,
cargo surveyors Intertek Testing Services and Societe Generale
de Surveillance said earlier this week.
 Investors remain cautious however, due to the uncertainty
about the debt woes of the euro zone.
 "Relatively firm in Q4," said a Jakarta-based palm analyst.
"Especially if concerns over Europe debt start to subside."
 "Crude's back up above $100 per barrel and everyone is
talking about La Nina suppressing production in Malaysian and
Indonesia," the analyst added. "If this is the case, could see
tightening ... as we head into seasonally low production
season."
 World stocks dipped to a one-week low on Thursday and the
euro held near a five-week trough while safe-haven German bonds
rose, as concerns grew over spillover damage to U.S. banks from
the euro zone sovereign debt crisis.
 In comparative markets, Brent crude slipped for a second
day, staying below $112 on concerns about demand growth, as
France and Germany clash over the role the European Central Bank
should adopt to rein in the region's sovereign debt crisis.
 U.S. soyoil for December delivery eased in Asian
trade, while China's most active May 2012 soybean oil contract
<0#DBY:> rose.	

  Palm, soy and crude oil prices at 1017 GMT
  Contract        Month    Last   Change     Low    High  Volume
  M'ASIA PALM OIL  DEC1    3229   -25.00    3228    3270     886
  M'ASIA PALM OIL  JAN2    3218   -28.00    3218    3269    6922
  M'ASIA PALM OIL  FEB2    3212   -29.00    3212    3268   22387
  M'ASIA PALM OIL  MAR2    3211   -29.00    3211    3261    5878
  DALIAN SOY OIL   MAY2    9252   +24.00    9156    9282  282482
  CBOT SOY OIL     DEC1   52.16    -0.32   52.02   52.52    4990
  NYMEX CRUDE      DEC1  102.24    -0.35  101.62  103.37   16047
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil in Chinese yuan per tonne
  Crude in U.S. dollars per barrel
 ($1 = 3.151 ringgit)	

 (Editing by Miral Fahmy)

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