Heavy selling drags down palm oil prices
Heavy selling drags down palm oil prices
KUALA LUMPUR (Reuter): Heavy selling pressure in spot futures month, a bearish crop report and technical selling dragged down Malaysian palm oil prices, traders said.
Despite a rebound in the Chicago soyoil futures overnight, the market reversed the earlier steady trend and selling appeared and continued into the afternoon session.
"Sentiment looks weak today particularly in the afternoon trade, with a bearish Ivan report hitting sentiment in late trade," a trader said.
Ivan Wong said yesterday Malaysia's palm oil output in May was estimated to have risen by 7.0 percent to 784,000 tons over April.
He put palm oil stocks at the end of May at 745,000 tons, compared with the Palm Oil Registration and Licensing Authority's (PORLA) 697,714 tons at end-April. Exports in May were estimated at 635,000 tons against 570,067 in April.
"Strong selling in spot futures has caused other futures months to fall sharply," a trader said, adding that players also liquidated for fear that prices may dip further in the near-term.
"We thought prices could rebound today after a higher opening on soyoil's gains and recent days' decline," a trader said. But thereafter the market eased off on lack of follow-through support.
Thursday's gains were also attributed to speculation that Indonesia's Joint Marketing Board which markets all crude palm oil produced by state plantations, reduced exports by half in April due to low output.
Third month August futures broke the 1,200 ringgit and weakened further as sentiment was depressed by the weak spot month which fell 31 ringgit to 1,182 ringgit a ton.
"As long as August futures fell below the psychological level of 1,200 ringgit, we are a bit nervous on belief that the market tone is bearish," a technical analyst said.
The contract, which closed today at 1,182 ringgit, will trade in the range of 1,170 and 1,220 next week. It was down 17 ringgit from Thursday's close.
Other futures contracts months also posted sharp falls. Physicals June (south) saw offers at 1,220 ringgit against bids at 1,217.50 after trading from 1,222.50 and 1,215, and June (central) at 1,210 versus 1,200 with earlier trades at 1,225 and 1,205.
July (south) saw offers at 1,220 after bids of 1,217.50 and trade of 1,222.50 and 1,217.50.
July (central) saw offers at 1,210 against bids of 1,200. In refined products, June RBD palm oil was offered at $517.50, July at $515 and Aug/Sept at $512.50.
June RBD palm olein saw offers at $560, July at $552.50 and Aug/Sept at $547.50. July was traded at $552.50.
July RBD palm stearin was offered at $380 and June/July palm fatty acid distillate saw sellers at $270..