By Anuradha Raghu
KUALA LUMPUR, Dec 12 (Reuters) - Malaysian palm oil futures
ended lower for the third straight day on Thursday, reversing
some gains made in the morning session on worries of sluggish
demand, but prospects of tighter supply from flood-affected
areas helped curb losses.
Benchmark palm prices have gained about 7 percent so far
this year, narrowing palm olein's discount to competing soyoil
from about $300 at the start of the year to just $67 currently.
A smaller spread could prompt buyers to switch to rival soyoil.
'What's bringing the market down is the worry of the
narrowing discount to soybean oil, high stocks in November, and
easing floods,' said a trader with a local commodities brokerage
'But prices are not breaking below 2,600 ringgit because of
smaller palm output,' the trader added.
The benchmark February contract on the Bursa
Malaysia Derivatives Exchange had inched down 0.7 percent to
2,612 ringgit ($809) per tonne by Thursday's close, easing from
a high of 2,657 ringgit hit in the early session.
Total traded volume stood at 32,392 lots of 25 tonnes,
slightly below the average 35,000 lots.
Floods in several palm-growing parts of Malaysia have
disrupted harvesting and transport of fresh fruit this month. A
group of millers on Thursday said output in southern Malaysia
during Dec. 1-10 fell nearly 30 percent from a month ago.
Plantation workers are unable to harvest much during the
rainy monsoon season, while palm oil lorries face problems
transporting the fresh fruit bunches to mills as roads are
either cut off or too muddy.
Water levels have receded in most of the worst flood-hit
areas for now, according to local media reports, although the
wet weather is expected to stretch until March.
Palm oil output also typically slows from November onwards
as a seasonal high-cycle fades and trees enter a resting period.
But weak demand from palm's biggest buyers could keep
stockpiles elevated at the current 1.98 million tonnes and weigh
'Exports are bad. The main two pillars India and China have
been quiet -- looks like they are well stocked up or have enough
of their domestic crop,' the trader said.
India, the world's leading palm oil buyer imported 774,207
tonnes last month, down 1 percent from the 782,467 tonnes
shipped in October, India's Solvent Extractors' Association
(SEA) said in a statement on Thursday.
Data from cargo surveyors showed that Malaysian palm oil
exports fell nearly 30 percent in the Dec.10 period compared to
a month ago.
In other markets, Brent oil futures fell below $109.50 a
barrel on Thursday on several bearish signals including the
possible re-opening of major Libyan ports this weekend and
expectations that the U.S. Federal Reserve may soon unwind a
In other competing markets, the U.S. soyoil contract for
January rose 0.2 percent in late Asian trade. The most
active May soybean oil contract on the Dalian
Commodities Exchange fell 0.5 percent.
Palm, soy and crude oil prices at 1038 GMT
Contract Month Last Change Low High Volume
MY PALM OIL DEC3 0 -19.00 0 0 0
MY PALM OIL JAN4 2598 -19.00 2597 2640 1256
MY PALM OIL FEB4 2612 -18.00 2611 2657 15486
CHINA PALM OLEIN MAY4 6206 -24.00 6192 6278 772540
CHINA SOYOIL MAY4 7196 -38.00 7190 7272 724798
CBOT SOY OIL JAN4 40.30 -0.10 40.21 40.49 4755
NYMEX CRUDE JAN4 97.52 +0.08 97.31 97.61 9225
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=3.23 Malaysian ringgit)
(Editing by Richard Pullin and Keiron Henderson)
Keywords: MARKETS VEGOILS/
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