SINGAPORE (Jan 4): Malaysian crude palm oil futures eased on Wednesday as traders booked profits from a weather-fuelled rally that lifted the market to a six-week high the previous day although an improving global output limited losses.
Upbeat U.S. and European data pointed to improved growth prospects and commodity demand this year despite lingering worries over the euro zone debt crisis that helped palm oil notch its first annual decline since 2008.
For the first week of the new year, markets are focusing on dry weather in South America hurting soy yields and the potential for heavy Southeast Asian rains to disrupt palm oil production.
"Futures were a little overbought yesterday. Albeit the strong sentiment, product buyers were not enthusiastic at all yesterday. The high prices will dampen the already anaemic demand," said a dealer with a local commodities brokerage in Malaysia. "Healthy correction is in the making -- palm futures targeted to see RM3,150 to RM3,180 in the near term," the dealer added.
By the midday break, benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange fell 0.7 percent to RM3,204 (US$1,000) per tonne. The market started the year strongly on Tuesday, hitting a 6-week high of RM3,244, a level unseen since Nov. 21.
Palm oil futures are expected to peak about RM3,270 according to a wave analysis, said Reuters market analyst Wang Tao.
Traded volumes for palm oil futures on Wednesday stood at 6,840 lots of 25 tonnes, thinner than the usual 12,500 lots as some traders said they were waiting for further cues.
"There is no new catalyst. We have been talking on weather for too long and now all eyes are on December stock level," said another trader with a foreign commodities brokerage in Kuala Lumpur.
Reuters will release a survey on Malaysia's December palm oil stocks later in the day.
The Malaysian Meteorological Department issued a warning that heavy rains may trigger floods over low-lying areas for key oil palm growing states of Johor, Pahang and Sabah, which account for almost 60 percent of national palm oil output.
Heavy rains can often disrupt production and may further tighten stocks although traders have reported very few disruptions in deliveries owing to the floods. While Malaysian palm oil exports slipped in December, demand according to cargo surveyors hovered about 1.49 million tonnes -- a level that can further eat into stocks.
In related markets, oil prices surged with U.S. crude hitting the highest settlement since May, fuelled by strong economic data and mounting concern about supply disruption from Iran. U.S. soyoil for January delivery inched down 0.3 percent in Asian trade after rallying in the previous session on Argentine weather worries.
The most active Sept 2012 soyoil contract on China's Dalian commodity exchange gained 1.3 percent on the back of stronger global economic sentiment.- Reuters
Upbeat U.S. and European data pointed to improved growth prospects and commodity demand this year despite lingering worries over the euro zone debt crisis that helped palm oil notch its first annual decline since 2008.
For the first week of the new year, markets are focusing on dry weather in South America hurting soy yields and the potential for heavy Southeast Asian rains to disrupt palm oil production.
"Futures were a little overbought yesterday. Albeit the strong sentiment, product buyers were not enthusiastic at all yesterday. The high prices will dampen the already anaemic demand," said a dealer with a local commodities brokerage in Malaysia. "Healthy correction is in the making -- palm futures targeted to see RM3,150 to RM3,180 in the near term," the dealer added.
By the midday break, benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange fell 0.7 percent to RM3,204 (US$1,000) per tonne. The market started the year strongly on Tuesday, hitting a 6-week high of RM3,244, a level unseen since Nov. 21.
Palm oil futures are expected to peak about RM3,270 according to a wave analysis, said Reuters market analyst Wang Tao.
Traded volumes for palm oil futures on Wednesday stood at 6,840 lots of 25 tonnes, thinner than the usual 12,500 lots as some traders said they were waiting for further cues.
"There is no new catalyst. We have been talking on weather for too long and now all eyes are on December stock level," said another trader with a foreign commodities brokerage in Kuala Lumpur.
Reuters will release a survey on Malaysia's December palm oil stocks later in the day.
The Malaysian Meteorological Department issued a warning that heavy rains may trigger floods over low-lying areas for key oil palm growing states of Johor, Pahang and Sabah, which account for almost 60 percent of national palm oil output.
Heavy rains can often disrupt production and may further tighten stocks although traders have reported very few disruptions in deliveries owing to the floods. While Malaysian palm oil exports slipped in December, demand according to cargo surveyors hovered about 1.49 million tonnes -- a level that can further eat into stocks.
In related markets, oil prices surged with U.S. crude hitting the highest settlement since May, fuelled by strong economic data and mounting concern about supply disruption from Iran. U.S. soyoil for January delivery inched down 0.3 percent in Asian trade after rallying in the previous session on Argentine weather worries.
The most active Sept 2012 soyoil contract on China's Dalian commodity exchange gained 1.3 percent on the back of stronger global economic sentiment.- Reuters
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