Palm takes breather after five-month highs
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)