Malaysian palm oil price drops after holiday

By: Unknown on 20:22

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KUALA LUMPUR - Malaysian palm oil futures fell to their lowest level in 2-1/2 weeks on Monday when the market reopened after the Lunar New Year holiday as losses in rival soyoil markets plus sluggish export demand outweighed a drop in the ringgit.

The US soyoil contract for May lost as much as 1.3 per cent in late Asian trade, forcing palm, a common food and fuel substitute, to give up last week's gains and drop to 2,237 ringgit, the lowest since Feb. 5.

"Weak soybean oil during the last three trading days should apply pressure (to palm)," said a trader with a foreign commodities firm in Kuala Lumpur. "At the same time, the weak Malaysian ringgit may limit or delay the fall."

The benchmark May contract on the Bursa Malaysia Derivatives Exchange, which closed for the Chinese festival after the morning session last Wednesday, ended down 2.7 per cent at 2,239 ringgit per tonne on Monday.

Traded volume was 39,157 tonnes, above the usual average of 35,000 lots.

Export data from cargo surveyor Intertek Testing Services (ITS) showed that shipments of Malaysian palm oil products from Feb. 1-20 were 3.6 per cent weaker than in the same period in January.

Another cargo surveyor Societe Generale de Surveillance reported a near 1 per cent fall.

While the decline was less steep than earlier in February, market players are concerned that poor export demand, amid prospects of improving palm yields, will lead to a build-up in stocks in coming months.

However, some traders said that with the ringgit falling to 3.6445 to the dollar, the slide in the palm contract was overdone and prices could be poised for a rebound. A weak ringgit usually spurs buying interest from overseas customers as the ringgit-priced feedstock becomes cheaper for them.

"There's nothing really to suggest why the market should go down so much," said a second Kuala Lumpur-based trader.
"It's not sustainable. Some people might be taking advantage to push the market down before all the other major markets come back into play," the trader added.
China's markets are still on the Lunar New Year break and will reopen on Feb. 25.
In other markets, oil prices slipped on Monday on worries about oversupply in North America, with Brent futures dropping below $60 a barrel and US contracts hovering around $50.30. Palm, soy and crude oil prices at 1014 GMT
Contract Month Last Change Low High Volume
MY PALM OIL MAR5 2247 -55.00 2237 2255 369
MY PALM OIL APR5 2240 -63.00 2237 2294 6140
MY PALM OIL MAY5 2239 -61.00 2237 2291 22484
CHINA PALM OLEIN MAY5 0 +0.00 0 0 0
CHINA SOYOIL MAY5 0 +0.00 0 0 0
CBOT SOY OIL MAY5 31.41 -5.60 31.25 31.63 4605
INDIA PALM OIL FEB5 456.50 -5.60 454.70 458.00 566
INDIA SOYOIL APR5 592.60 -5.95 591.20 596.70 23510
NYMEX CRUDE APR5 50.15 -0.66 50.12 50.99 35565
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US 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 US dollars per barrel
($1 = 3.6330 Malaysian ringgit)
($1 = 6.2551 Chinese yuan)
($1 = 62.23 Indian rupee

)