12:56 28Jul11 RTRS-VEGOILS-Palm oil drops U.S. debt jitters, improved soy weather
(Adds details, comments, quotes)
* Palm oil futures could drop as low as 2,800 rgt -Mistry
* U.S. debt talks still deadlocked
* Some rains in the U.S. Midwest spur some profit-taking
By Niluksi Koswanage
KUALA LUMPUR, July 28 (Reuters) - Malaysian palm oil futures dropped 1.2 percent on Thursday as concerns over a looming global debt crisis and improved weather for parched U.S. soy crops prompted investors to cut back positions.
A possible U.S. credit rating downgrade has weighed on financial markets, adding to weak sentiment in palm oil futures that have lost 18 percent so far this year.
A turn to better crop weather in the U.S. as well as bearish estimates for ample palm oil supply from top industry analyst Dorab Mistry further pressured the vegetable oil markets.
"Sentiment is really weak. We could be seeing more profit taking in the days to come but the hot weather has started to hurt soy yields in the U.S.," said a trader with a foreign commodities brokerage.
"Also, stocks are growing in palm oil producers like Malaysia and Indonesia, so we are in for volatile trade," he added.
By midday, the benchmark October contract
Traded volumes were light at 7,357 lots of 25 tonnes each, compared to the usual 12,500 lots as investors remained cautious.
Technicals were negative. Reuters analyst Wang Tao said Malaysian palm oil will fall further to 3,064 ringgit per tonne, as it has dropped below a rising channel.
Leading palm oil analyst Dorab Mistry said the market could drop as low as 2,800 ringgit in September as stocks in Malaysia remain stubbornly high.
Crude oil, a barometer for commodities and the global economy, fell further in Asian trade as U.S. inventories rose and debate on raising the U.S. debt ceiling before an Aug. 2 deadline to avoid default went unsettled.
U.S. soyoil for August delivery
China is likely to start importing more soybeans and vegetable oils from July after weak purchases in past months, said a Hamburg-based oilseeds analysts Oil World on Tuesday.
The most active May 2012 soyoil on China's Dalian Commodity Exchange
fell 0.5 percent.
08:15 28Jul11 Reuters-STUBBORNLY HIGH MALAYSIAN PALM OIL STOCKS MAY SEE PRICES
08:15 28Jul11 Reuters-MALAYSIAN PALM OIL TO FIRST RANGE BETWEEN 3,100 RINGGIT TO 3,300 RGT IN NEXT 6 WEEKS ON U.S. WEATHER CONCERNS - MISTRY
08:15 28Jul11 Reuters-INDONESIA'S 2011 PALM OIL OUTPUT SEEN AT 25.5 MLN TONNES, UP 13.3 PERCENT FROM 2010 - MISTRY
08:15 28Jul11 Reuters-MALAYSIA'S 2011 PALM OIL OUTPUT SEEN AT 19 MLN TONNES, UP 11.8 PERCENT FROM 2010 - MISTRY
08:15 28Jul11 Reuters-GLOBAL VEGOIL SUPPLY GROWTH OUTSTRIPPING DEMAND GROWTH BY 2.7 MLN TONNES, FIRST TIME IN THREE YEARS - MISTRY
KUALA LUMPUR, July 28 (Reuters) - Expectations for rising Southeast Asian palm oil production in the second half of this year have prompted analysts to revise forecasts upwards.
Industry analyst Dorab Ministry revised up estimates for Indonesia and Malaysia, the world top two producers who account of 85 percent of total output.
The market tends to price in Malaysian production data that is issued regularly compared to Indonesia, even though it is the world's largest producer and exporter of the vegetable oil.
Following are estimates for 2011 Indonesian and Malaysian production and new changes:
MALAYSIAN PALM OIL OUTPUT FOR 2011 except for USDA
FORECAST CHANGES
(millions of tonnes)
Official government data 17.6 17.0 in 2010
Dorab Mistry 19.0 earlier forecast 17.3
Oil World 18.6 earlier forecast 17.8 2010 estimate of 16.0
USDA * 17.5 no change previous year 17.8
Ganling 17.5 nil
INDONESIAN PALM OIL OUTPUT FOR 2011 except for USDA
FORECAST CHANGES
(millions of tonnes)
Official government data 24.4 earlier estimate 22-23 2010 forecast of 23.2
Dorab Mistry 25.5 earlier forecast 25.0
Oil World 24.0 earlier forecast 23.7 2010 estimate of 22.2
USDA * 23.6 no change previous year 22.0
Ganling 23.2 nil
07:12 28Jul11 -VEGOILS-U.S. crop developments to drive palm oil futures
KUALA LUMPUR, July 28 (Reuters) - The following factors are likely to influence Malaysian palm oil futures and other vegetable oil markets on Thursday.
FUNDAMENTALS
Malaysia palm oil futures rose 0.4 percent in light trade on Wednesday on strong soy markets as China resumed buying and dry weather in the United States, although gains were limited over concerns of a looming U.S. debt crisis.
U.S. wheat futures rallied more than 1 percent on Wednesday as an annual tour of spring wheat fields in the northern U.S. Plains appeared to verify fears that production would fall short of expectations.
Oil prices fell on Wednesday as data showed the first release of crude from the U.S. petroleum reserve unexpectedly pushed up domestic inventories last week, adding to concerns over weak economic data.
MARKET NEWS
Commodities fell in thin volumes on Wednesday as the dollar rebounded on uncertainties over U.S. debt talks, with oil leading the decline as U.S. crude stockpiles mounted.
U.S. stocks suffered their worst day in eight weeks on Wednesday as lackluster earnings and weak economic data hit investors already nervous about faltering debt talks in Washington, while the U.S. dollar rebounded following a sell-off this week.
08:15 28 Jul11 -Stubbornly high stocks to drag on palm oil futures-Mistry By Niluksi Koswanage
KUALA LUMPUR, July 28 (Reuters) - Palm oil futures
That represents a drop of around 29 percent from 2011 high of 3,967 ringgit in February as Godrej International's Dorab Mistry said a high output cycle remains in force and will lead to record high stocks for Malaysia by early December.
But price declines could be limited as a palm oil discount to competing soyoil would widen to a new 2011 peak of $250 per tonne, kicking in more demand, Mistry said. The narrowest discount stood at $2 per tonne in late February, according to Reuters data.
"The legacy of high stocks will continue to pressure prices for some time," Mistry told an industry conference in Sydney.
"I am expecting prices to touch a low in September and to scrape along that bottom for at least four to six weeks. Then a gradual recovery will ensue," he added.
But before that, palm oil futures will range between 3,100 ringgit and 3,300 ringgit in the next six weeks from now as concerns over hot weather affecting the U.S. soy crop has sparked a rally in grains and vegetable oil markets.
"(Malaysian) August crude palm oil production will be affected somewhat by the Ramadan holidays and export demand in summer will be strong," Mistry said, referring to a Muslim fasting observance when estate workers take extended leave.
"As we go into September, it could be a different story."
18:32 27Jul11 -Indonesia's Astra Agro fails to sell 4,000 T palm oil
JAKARTA, July 27 (Reuters) - Astra Agro Lestari
Astra offered the CPO at 8,395 rupiah to 8,645 rupiah per kg.
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