VEGOILS-Palm oil hits 2-week low on bearish USDA report

Fri Jan 13, 2012 5:23am EST

* USDA report showed higher forecast of supplies
    * Palm oil to head towards 3,140 ringgit - technicals
    * Malaysian weather office upgrades heavy rain warning

 (Updates prices)	
    By Chew Yee Kiat	
    SINGAPORE, Jan 13 (Reuters) - Malaysian crude palm oil
futures slipped on Friday as a much-anticipated U.S. crop report
showed a higher-than-expected forecast of oilseed supplies,
temporarily overshadowing prospects of lower production due to
erratic weather.	
    The U.S. Department of Agriculture January crop report
painted a rosier picture for global supplies on Thursday, while
the Malaysian Palm Oil Board said this week that December stock
levels were higher than expected. 	
    "With both the highly anticipated reports disappointing the
bulls, the market will henceforth look at fundamentals," said a
trader with a domestic commodities brokerage in Malaysia. 	
    Benchmark March palm oil futures on the Bursa
Malaysia Derivatives Exchange fell 1.6 percent to close at 3,151
ringgit ($1,007) per tonne. Prices earlier touched an intraday
low of 3,143 ringgit, a level last seen on Dec. 29.	
    Traded volumes stood at 30,727 lots of 25 tonnes each,
higher than the usual 25,000 lots for the first time in the
week.	
    Palm oil futures will clear a support at 3,176 ringgit per
tonne to head towards 3,140 ringgit thereafter, based on
technical analysis, Reuters market analyst Wang Tao said.
    	
    While the bearish USDA report sent the markets lower,
weather concerns should continue to provide support for oilseed
prices.	
    "Soybean losses were smaller than those for corn or wheat as
it found underlying support from continued worries about damage
to Argentina's soybean crop due to hot, dry weather," said Abah
Ofon, agricultural commodities analyst with Standard Chartered
Bank in Singapore.	
    Similarly for palm oil, traders are keeping a close watch on
wet weather in key exporter Malaysia as floods could disrupt
production, adding pressure to tightening stocks.	
    The Malaysian weather office upgraded its heavy rain warning
to orange from yellow for Pahang and Johor, key oil palm
producing states that account for 30 percent of national output.	
    The industry expects January production levels to be lower
but demand is expected to follow suit.	
    Cargo surveyors Intertek Testing Services and Societe
Generale de Surveillance reported a 14 and 19 percent drop in
Malaysia's palm oil exports for first 10 days in January.
  	
    The cargo surveyors will release exports data for Jan. 1-15
on Monday.	
    In related markets, Brent crude rose to close to $112 a
barrel on Friday, adding to the previous day's rally on the
prospect of Nigeria's oil unions halting the sector from Sunday,
part of a national strike against the end of fuel subsidies.
 	
    The bearish USDA report also weighed on some vegetable oil
markets. 	
    The most active U.S. soyoil contract for March delivery
 was slightly up after earlier losses while the most
active September 2012 soyoil contract on China's Dalian
commodity exchange lost 0.8 percent.	
    "Historically speaking, the price movement following the
January report may last a while, maybe 1-2 weeks. But the South
American weather still remains a concern for the soyoil market,"
said Huang Zhi Qiang from Guotai Junan Futures in Shanghai.	
        	
  Palm, soy and crude oil prices at 1003 GMT
                                                                    
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      JAN2    3140   -67.00    3140    3140       4
  MY PALM OIL      FEB2    3151   -69.00    3148    3190    2185
  MY PALM OIL      MAR2    3151   -51.00    3143    3186   14279
  CHINA PALM OLEIN SEP2    8040  -102.00    8032    8110   67744
  CHINA SOYOIL     SEP2    9004   -70.00    8988    9050  226790
  CBOT SOY OIL     MAR2   51.47    +0.01   51.19   51.75    7577
  NYMEX CRUDE      FEB2   99.84    +0.74   99.12  100.19   19606
                                                                    
  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=3.13 ringgit)	
	
 (Editing by Clarence Fernandez)