Palm oil down
Malaysian palm oil futures edged down on Wednesday to hover around their lowest levels in more than a year, weighed down by projections of bigger-than-expected supplies of rival oilseeds, which could eat into demand for the tropical oil. The US Department of Agriculture (USDA) estimated on Tuesday that US soyabean stocks would end the 2014/2015 marketing year at 430 million bushels, surpassing market expectations of 414 million.
Copyright Reuters, 2014
Bigger supplies for crushing would weaken soyoil prices and potentially channel food and fuel demand away from palm. The USDA forecast comes just after a report from regulator the Malaysian Palm Oil Board (MPOB) on Monday that showed palm oil stocks in the No 2 producer unexpectedly rose to 1.68 million tonnes at the end of July, against trade estimates that inventories would shrink.
"Both the MPOB and USDA are bearish, and prices have already factored them in well," said a trader with a commodities brokerage in Kuala Lumpur. The benchmark October contract on the Bursa Malaysia Derivatives Exchange had ended 0.5 percent lower at 2,177 ringgit ($682) per tonne on Wednesday, giving up gains in the morning session to settle at the lower end of intraday trade.
Market players said palm oil prices, which have tumbled more than 18 percent so far in 2014 to hit their lowest in over a year at 2,162 ringgit on Tuesday, may be stuck in a range until there is more clarity on demand. Technicals showed Malaysian palm oil was expected to retest support at 2,172 ringgit per tonne as it could have more or less completed a rebound triggered by this level, said Reuters market analyst Wang Tao.
Traders will also be watching for export data for the first half of August, which is due from cargo surveyors on Friday. Malaysian overseas sales of palm oil products were weak between August 1-10, falling 20-22 percent compared to the same period in July as demand from China and Europe lagged.
Palm oil imports to the world's top edible oil buyer rose nearly 10 percent to 657,750 tonnes in July compared to June, according to the Solvent Extractors' Association of India (SEA), raising hopes that demand would continue strong this month. In competing vegetable oil markets, the US soyoil contract for December fell 0.1 percent in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange shed 0.3 percent.