Wednesday, December 19, 2012
20121219 1803 Palm Oil Related News.
VEGOILS-High stocks, weak exports weigh on palm oil
Wed Dec 19, 2012 12:37am EST
* High inventory levels still a "major factor" for investors
* Palm oil's target at 2,285 ringgit intact -technicals
* Prices can only recover in 2013 if exports pick -analyst
(Updates prices, adds detail)
By Anuradha Raghu
KUALA LUMPUR, Dec 19 (Reuters) - Malaysian palm oil futures
inched lower for a second day on Wednesday as sluggish exports
in the first half of the month fan concerns that stockpiles in
the world's no.2 producer could hit another record high.
Weaker demand from top food consumers China and India early
this month have traders worried that seasonally slowing output
might not be enough to cut inventory levels, weighing on prices
that lost 27 percent so far this year.
Demand might have tapered off as palm oil tends to
crystallise in the northern hemisphere's current winter season,
prompting buyers switch to competing soy oil that has a lower
"The major factor is still the end stock," said a trader
with a foreign commodities brokerage. "The fear is still there
-- that stocks are not going to draw down further if exports
don't pick up the second half of this month," the trader added.
By the midday break, the benchmark March contract
on the Bursa Malaysia Derivatives Exchange fell 1.2 percent to
2,315 ringgit ($758) per tonne. Prices kept at a tight range of
2,313 - 2,327 ringgit per tonne.
Total traded volumes stood at 11,816 lots of 25 tonnes each,
slightly lower the usual 12,500 lots as some investors winded up
positions ahead of the year end.
Technical analysis showed palm oil prices remained unchanged
at a bearish target of 2,285 ringgit, said Reuters market
analyst Wang Tao.
Investors are pinning hopes on the government's new crude
palm oil export tax regime, set at zero for January, to help
spur shipments of the grade and cut down record stocks which hit
2.56 million tonnes in November.
"The case in the market is whether export demand can hold up
and continue. That's why we are seeing palm oil pricing at such
a large discount to other oils," said ANZ agricultural and
commodity strategist Victor Thianpiriya in Singapore.
"We don't see the potential for a dramatic pick up in prices
until early next year, and that's only if export demand
continues to be strong."
Brent futures edged up near $109 a barrel on Wednesday on
expectations that a budget crisis in the United States will be
resolved, saving the world's top oil consumer from slipping into
In other competing vegetable oil markets, U.S. soyoil for
January delivery was almost flat in early Asian trade.
The most active May 2013 soybean oil contract on the
Dalian Commodity Exchange edged down 1.4 percent.
Posted by MW Chong at 6:03 PM