VEGOILS-Palm oil reverses gains from near 3-week high on slow demand, stronger ringgit

KUALA LUMPUR:

Malaysian palm oil futures reversed gains to fall from a near three-week high on Thursday evening, due to sluggish export demand and a stronger ringgit.

The ringgit gained 0.8 percent in evening trade to touch 4.0900 against the dollar. Palm oil becomes more expensive for holders of foreign currencies on a stronger ringgit, the currency palm oil is traded in.

The palm oil contract for May delivery on the Bursa Malaysia Derivatives Exchange lost 0.4 percent to 2,548 ringgit ($623) per tonne at the end of the trading day, after earlier reaching an intra-day high of 2,577 ringgit.

Traded volume stood at 45,453 lots of 25 tonnes each on Thursday.

The market had earlier rallied as leading analysts at a Kuala Lumpur conference forecast lower output due to the crop- damaging El Nino phenomenon.

February output from Malaysia, the world’s second largest producer of palm oil, fell to a nine-year low of 1.04 million tonnes, declining 7.7 percent from a month ago, data from the Malaysian Palm Oil Board (MPOB) showed on Thursday.

“February’s end-stocks were within trade expectations, demand has yet to improve,” said a trader from a brokerage firm in Kuala Lumpur.

There was a rise in exports for the first 10 days of March, but it is against a low base during the same period in February due to the Lunar New Year celebrations, said the trader, adding that the stronger ringgit led to some speculative selling in the market.

Export data from two cargo surveyors showed shipments rising to 327,551 tonnes in the first 10 days of March.

“Cargo surveyor export data is not exciting… At this rate, for the full month of March we will reach 1 million tonnes only,” said another trader.

The El Nino brings scorching heat across Southeast Asia, reducing palm yields and lowering output in top producers Indonesia and Malaysia. Industry experts at the Kuala Lumpur conference see the weather phenomenon lifting palm’s benchmark prices to 2,700-3,000 ringgit a tonne.

In competing vegetable oil markets, the May soybean oil contract on the Dalian Commodity Exchange rose 0.3 percent, while the Chicago soyoil contract was slightly up by 0.03 percent.

Palm, soy and crude oil prices at 1019 GMT

Contract Month Last Change Low High Volume

MY PALM OIL MAR6 2489 -29.00 2485 2507 64

MY PALM OIL APR6 2527 -17.00 2524 2559 1819

MY PALM OIL MAY6 2548 -9.00 2540 2577 22516

CHINA PALM OLEIN MAY6 5070 -12.00 5062 5192 878500

CHINA SOYOIL MAY6 5696 +14.00 5690 5756 386412

CBOT SOY OIL MAY6 31.59 -9.80 31.53 31.79 4802

INDIA PALM OIL MAR6 497.70 -9.80 496.30 506.30 2774

INDIA SOYOIL MAR6 608.25 -4.25 608.10 612.00 8970

NYMEX CRUDE APR6 37.87 -0.42 37.84 38.34 55723

Palm oil prices in Malaysian ringgit per tonne