Malaysian palm oil rose on Monday on expectations of positive palm oil export data for September and a weakening ringgit, but volumes remained low as competing edible oil prices slipped and US soybeans hit a four-year low. The market is anticipating Malaysian palm oil exports to climb by around a third to 1.6 million tonnes this month, traders said, after both leading surveyors reported last week that exports had already reached 1.3 million tonnes as of Thursday, sending prices to a six-week high.
"The rumours that the full-month export figure could hit 1.585 (million tonnes) were the lynchpin," said a trader with a foreign commodities brokerage in Kuala Lumpur, adding that traders were also closely watching the value of the ringgit as well as the difference between palm and soybean prices. The ringgit fell around 0.6 percent on Monday, slipping to 3.277 to the dollar, having subsided more than 4 percent this month. A weaker ringgit makes Malaysian palm oil cheaper for international customers.
Malaysian palm oil prices usually track the most active soybean oil contract on China's Dalian Commodities Exchange. "Anything below $70, consumers may shift to soyoil," the trader said, adding that soyoil was considered superior to palm in some countries. The difference between the two edible oils has narrowed recently and is currently at around $65, he said.
"Despite the bearish beanoil and weakened Dalian (prices), our palm seems to be holding," said a trader at a local commodities brokerage in Kuala Lumpur. US soybean futures dropped to their lowest since early 2010 on Monday as ideal weather across key US growing regions allowed farmers to rapidly harvest record crops. Another market player said the recent Globoil edible oils conference in India had sent traders mixed signals on where prices were heading over the coming months.
"We need fresh news," said the trader with a local commodities brokerage in Malaysia. "Half of the speakers were bullish and half were bearish," he said. "The big question mark is whether the huge grains surplus in the US is going to dampen demand for olein?" During the conference on Sunday, leading palm oil analyst Dorab Mistry said prices of the edible oil could fall to a 5-1/2-year low of 1,900 ringgit per tonne on higher output volume and sluggish demand, but that losses could be restricted to 2,000 ringgit if the Malaysian currency depreciates sharply.
By Monday's close the benchmark December contract on the Bursa Malaysia Derivatives Exchange had climbed 0.69 percent to 2,192 Malaysian ringgit ($668.90) per tonne. Total traded volume on Monday stood at 26,489 lots of 25 tonnes, below the daily average of 35,000 lots. Over the coming months, prices could dip further to 2,100-2,150 ringgit before recovering, the trader said, but would not likely dip below the 2,100 level.
"We don't see demand being there for November and December because Europe will go into winter, and Northern China will go into winter." However, crude palm oil export prices in Indonesia, the world's biggest producer, could rise as much as 10 percent to $750 per tonne in January-March 2015 because dry weather in the top two producing countries is expected to moderate production growth, leading analyst Thomas Mielke said on Sunday at the Globoil conference in India.
In other markets, Brent crude oil fell below $97 a barrel on Monday, moving closer to a two-year low hit last week as weak data from major buyer China and a stronger US dollar added to pressure from strong supplies. In competing vegetable oil markets, the US soyoil contract for December rose 0.75 percent in Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange fell 0.85 percent.