VEGOILS-Palm oil fails to hold gains, but supply concerns support

Thu Nov 14, 2013 5:43am EST

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(Updates prices)
    * Investors cautious as prices hover near 2,600 rgt-trader
    * Prices seen in 2,400-2,600 rgt range but could hit
2,800-Mistry

    By Anuradha Raghu
    KUALA LUMPUR, Nov 14 (Reuters) - Malaysian palm oil futures
ended lower on Thursday as investors turned cautious about risky
bets, but uncertainty about supplies of competing edible oil
from the Philippines propped up prices.
    Palm oil prices rose to near two-week highs on Wednesday on
concerns that Typhoon Haiyan had damaged coconut crops in the
Philippines and could disrupt the supply of coconut oil from one
of the world's top producers. 
    By Thursday's close, the benchmark January contract 
on the Bursa Malaysia Derivatives Exchange had edged down 0.6
percent to 2,588 ringgit ($809) per tonne, with prices moving in
a tight range between 2,583-2,617 ringgit. 
    Total traded volume stood at 29,368 lots of 25 tonnes each
on Thursday, lower than the average 35,000 lots as some
investors chose to stay on the sidelines. 
    Any shortage of Philippine coconut oil could channel demand
to palm oil-based substitutes such as palm kernel oil. The price
of crude palm kernel oil PKO-MYSTH-M1 rose to 3,802 ringgit
per tonne on Thursday from 3,720 ringgit on Wednesday in choppy
trade. 
    Futures market players are avoiding risk as prices hover
near the 2,600 ringgit mark, waiting for more news on export
demand and Southeast Asian palm output. 
    "The 2,600 ringgit level is a critical point. Buyers and
sellers are a bit cautious -- people are unsure and are waiting
for the next bit of news before making any moves," said a trader
with a foreign commodities brokerage 
    "Palm kernel oil prices are choppy. Players are quite
sensitive to buying and selling because of the situation in the
Philippines," the Malaysia-based trader added. 
    Palm oil futures will probably trade in a range of
2,400-2,600 ringgit over the next six months, leading industry
analyst Dorab Mistry said on Thursday, but they could climb as
high as 2,800 ringgit depending on output in top producer
Indonesia and the success of its biodiesel mandate.
 
    Mistry's forecast, given at a vegetable oil meeting in
China, reverses his earlier prediction that prices would be
stuck in a 2,200-2,400 ringgit range and could even fall to
2,000 ringgit in early January.
    Investors are waiting for cargo surveyor export data for the
first half of November, which will be released on Friday, to
gauge winter demand for the tropical oil. 
    The Malaysian government will also announce its crude palm
oil export tax for December on Friday. The No.2 producer has
kept its export duty at 4.5 percent since March. 
    In other markets, Brent oil rose towards $108 per barrel on
Thursday, bolstered by Federal Reserve comments which reassured
investors that the U.S. would maintain stimulus measures for
now, and a warning of likely rising prices from the
International Energy Agency.       
    In competing vegetable oil markets, the U.S. soyoil contract
for December rose 0.4 percent in late Asian trade. The
most active May soybean oil contract on the Dalian
Commodities Exchange rose 1 percent.   
  
  Palm, soy and crude oil prices at 1021 GMT
                                                                                                  
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      NOV3    2578   -16.00    2578    2580      31
  MY PALM OIL      DEC3    2576   -26.00    2574    2601    2762
  MY PALM OIL      JAN4    2588   -16.00    2583    2617   15639
  CHINA PALM OLEIN MAY4    6332   +36.00    6282    6344  624410
  CHINA SOYOIL     MAY4    7282   +70.00    7224    7296  852508
  CBOT SOY OIL     DEC3   41.12    +0.16   40.86   41.26    5299
  NYMEX CRUDE      DEC3   93.81    -0.07   93.48   94.03   10898
                                                                                                  
  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 = 3.20 Malaysian ringgit)

 (Editing by Alan Raybould and Anand Basu)
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