Malaysia Palm Oil slips on demand worries, hits 3-week low

KUALA LUMPUR, May 22, 2015 – Malaysian palm oil futures fell on Friday and hit their lowest level in 3 weeks, snapping a two-week uptrend, on rising scepticism among investors about the sustainability of the robust export demand seen this month.

Palm futures in Malaysia, which set the tone for global prices of the tropical oil, have dropped for four out of the past five sessions, although data showing a surge in May exports by the second-biggest producer limited losses.

The contract clawed back some gains on Thursday as weak prices attracted bargain hunters, but brewing doubts on demand from key buyers in the coming months weighed.

“Things are a little on the negative side, but export numbers have been awesome of late. That has provided some support,” said a trader with a foreign commodities brokerage in Kuala Lumpur. Cargo surveyor data showed an up to 53 percent surge in shipments of Malaysian palm oil between May 1-20, 2015

“But some people feel that the good exports will taper off at the end of the month and it would not remain at this pace … this pace is just too good to be true,” the trader added.

The benchmark August contract 1FCPOc3 on the Bursa Malaysia Derivatives exchange had sunk 1.02 percent to 2,136 ringgit ($596.31) a tonne. In afternoon trading prices touched the 2,127 ringgit level, their lowest in three weeks.

Palm is down 1.4 percent for the week, its first decline after two weeks of gains.

Total traded volume stood at 34,598 lots of 25 tonnes each, below the average 35,000 lots.

The El Nino weather phenomenon predicted by meteorologists could push depressed palm oil prices as high as $700 a tonne this year, an industry group in top producer Indonesia said on Friday, although any impact on production would not come until early 2016.

Meanwhile, Malaysia’s Sime Darby Bhd, the world’s largest listed palm oil producer, reported a 54.7 percent drop in its third-quarter net profit amid weaker prices of the tropical oil and lower earnings at its industrial and motors businesses.

In other markets, oil prices steadied on Friday as worries over the impact on crude supplies of war in the Middle East were balanced by reports of profit-taking ahead of a long weekend.

The U.S. July soyoil contract BON5 was down 0.31 percent by 1036 GMT, while the most active September soybean oil contract DBYcv1 on the Dalian Commodity Exchange inched down 0.07 percent.

Palm, soy and crude oil prices at 1038 GMT

  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JUN5    2132   -22.00    2125    2147     404
  MY PALM OIL      JUL5    2139   -24.00    2129    2157    7207
  MY PALM OIL      AUG5    2136   -22.00    2127    2156   17288
  CHINA PALM OLEIN SEP5    4938   +12.00    4912    4966  450228
  CHINA SOYOIL     SEP5    5706    +4.00    5684    5750  528966
  CBOT SOY OIL     JUL5   32.16    -2.20   32.05   32.36    5656
  INDIA PALM OIL   MAY5  447.50    -2.20  447.00  451.60     219
  INDIA SOYOIL     JUN5  596.10    -2.25  594.20  600.30   24625
  NYMEX CRUDE      JUL5   60.41    -0.31   60.27   60.80   21755

* 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
* India soy oil in Indian rupee per 10 kg
* Crude in U.S. dollars per barrel

** ($1 = 3.5820 ringgit)
** ($1 = 6.1972 Chinese yuan)
** ($1 = 63.5400 Indian rupees)