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Thursday, October 31, 2013

Palm oil ends lower as demand dips ringgit stronger after M'sia budget

Published: Saturday October 26, 2013 MYT 7:19:00 AM 
Updated: Saturday October 26, 2013 MYT 7:21:28 AM

KUALA LUMPUR: Malaysian palm oil futures ended lower on Friday after weaker-than-expected export data fanned concerns that demand for the tropical oil has begun to taper, while a stronger ringgit following the Malaysian budget announcement curbed buying.

Cargo surveyor Intertek Testing Services said that shipments of Malaysian palm oil fell 0.6 percent to 1,231,393 tonnes in the Oct. 1-25 period, as a lull in exports to India offset a slight increase to China and Europe. 

Another cargo surveyor Societe Generale de Surveillance showed exports rise 3.8 percent for the same period. 

But losses were capped by expectations that output in Malaysia, the world's No.2 producer, has slowed and would help keep stocks under 2 million tonnes despite dwindling exports. 

"The market is bracing for further selling given the expectation that demand is tapering," said a trader with a local commodities brokerage in Kuala Lumpur. 

The Malaysian ringgit rose 0.6 percent to 3.1425 against the dollar on Friday after Prime Minister Najib Razak said the government will impose a new consumption tax. A stronger ringgit makes palm feedstocks more expensive for overseas buyers. 

By Friday's close, the benchmark January contract on the Bursa Malaysia Derivatives Exchange had eased 0.8 percent to 2,444 ringgit ($777) per tonne, chaffing away at weekly prices which posted a small gain of 1.8 percent.

Total traded volume stood at 30,546 lots of 25 tonnes each, lower than the usual 35,000 lots. Investors are wary as measures the 6 percent goods and services tax (GST) which will be implemented in April 2015 could eat into local consumption demand. 

"The implementation of such policies is likely to result in a pullback in domestic demand, thereby weighing on palm oil prices," Phillip Futures analyst Tan Chee Tat said in a note. 

Malaysia is set to impose a requirement for biodiesel to use 7 percent palm oil, up from 5 percent now, as a way of whittling down palm oil stocks and cushioning prices in the face of growing competition from other edible oils. 

Industry and government officials said the "B7" biodiesel blend could be mandatory from December as talks with interested parties were nearing a conclusion. 

In other markets, Brent crude oil fell below $107 a barrel on Friday in a third day of falls on concerns over increasing supply and faltering demand despite signs of faster economic growth in China. 

In competing vegetable oil markets, the U.S. soyoil contract for December fell 0.1 percent in late Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange dropped 0.8 percent.

  Palm, soy and crude oil prices at 1018 GMT
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      NOV3    2458   -14.00    2455    2465     453
  MY PALM OIL      DEC3    2445   -17.00    2443    2461    3799
  MY PALM OIL      JAN4    2444   -20.00    2441    2460   16810
  CHINA PALM OLEIN MAY4    6084   -70.00    6060    6132  940706
  CHINA SOYOIL     MAY4    7136   -58.00    7130    7204  686502
  CBOT SOY OIL     DEC3   41.12    -0.01   41.05   41.38    6647
  NYMEX CRUDE      DEC3   97.54    +0.44   96.99   97.57   14912
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
Crude in U.S. dollars per barrel

($1=3.146 Malaysian ringgit) - Reuters

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