KUALA LUMPUR, July 4: Malaysian palm oil futures inched higher on Thursday, spurred by gains in China’s soy markets and investor optimism for stocks in the world’s No.2 producer to shrink for a sixth straight month.
But prices stayed in a tight range between 2,366 ringgit and 2,384 ringgit, as investors avoided risky bets ahead of an official stocks report to be released next Wednesday by industry regulator the Malaysian Palm Oil Board (MPOB).
Palm oil inventories at the end of June are likely to have dropped to a year-low of 1.74 million tonnes, a Reuters poll showed, as demand continued to outstrip supply.
‘The market today is moving higher on the back of friendly Dalian soybean oil pricing. Palm has been down for some time, so it’s adjusting. The rebound should come back to 2,400 ringgit,’ said a trader with a foreign commodities brokerage.
‘The market is rangebound — we’re waiting for the MPOB report next week. People expect a further stock drawdown,’ the Kuala Lumpur-based trader added.
By the midday break, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had gained 0.6 percent to 2,380 ringgit ($747) per tonne.
Total traded volumes stood at 12,699 lots of 25 tonnes each, just slightly above the usual 12,500 lots.
Technicals showed palm oil was expected to test a strong resistance at 2,391 ringgit, only a break above which could lead to a further gain to 2,408 ringgit, Reuters market analyst Wang Tao said.
Despite stronger exports buoyed by demand for the Muslim fasting month of Ramadan in July, palm has been weighed by laggard economic conditions in top two buyers China and India, coupled with a bearish outlook on production. Prices fell 3.9 percent in the first half of 2013.
Output of the tropical oil in June is seen rising 6 percent, the Reuters poll showed, suggesting the start of a higher production cycle that typically begins in the second half.
‘Rising production of palm oil in the second half of the year has dampened price gains. Crude palm oil prices are likely to come under pressure in the coming months,’ Phillips Futures investment head Say Hwa said in a note.
In other markets, Brent crude slipped from a two-week high on Thursday as the threat of a Middle East supply disruption eased after Egypt’s armed forces toppled its president to force a resolution to a political crisis.
In vegetable oil markets, the most-active January soybean oil contract on the Dalian Commodities Exchange rose 0.4 percent in early Asian trade. The U.S. Soyoil markets were closed for the Independence Day holiday.
Palm, soy and crude oil prices at 0505 GMT
Contract Month Last Change Low High Volume
MY PALM OIL JUL3 0 +0.00 0 2361 0
MY PALM OIL AUG3 2384 +16.00 2370 2386 1109
MY PALM OIL SEP3 2380 +15.00 2366 2384 6092
CHINA PALM OLEIN JAN4 5942 +48.00 5902 5962 319526
CHINA SOYOIL JAN4 7376 +30.00 7326 7386 409394
CBOT SOY OIL DEC3 45.99 +0.00 0.00 0.00 0
NYMEX CRUDE AUG3 101.46 +0.22 100.98 101.49 3979
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=3.187 ringgit)
(agencies)
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