VEGOILS-Palm oil ends lower on profit taking after industry gathering

Fri Nov 29, 2013 6:16am EST

(Recasts, updates prices)
    * Prices post weekly gain of 0.4 pct
    * Palm oil prices could hit 3,000 rgt/T by March 2014-Mistry
    * Higher biodiesel mandates to boost sector-Sime Darby
    * Palm oil still targets 2,692 ringgit-technicals

    By Anuradha Raghu
    KUALA LUMPUR, Nov 29 (Reuters) - Malaysian palm oil futures
ended lower on Friday as investors booked profits from gains
made earlier in the week, but prices were supported by optimism
that higher biofuel mandates will stoke edible oil demand and
prop up the tropical oil. 
    Market players had expected industry officials and leading
vegetable oil analysts to deliver a bullish palm oil outlook at
an industry meeting in Indonesia, and participated in a bout of
position squaring on Thursday, although overall trade volumes
were low throughout the week.
    "There were a lot of speculative buyers. Those who bought on
rumours are now selling and taking profits. They knew these guys
were going to be bullish," said a trader with a local
commodities brokerage. 
    By Friday's close, the benchmark February contract 
on the Bursa Malaysia Derivatives Exchange had edged down 0.1
percent to 2,653 ringgit ($824) per tonne. However, gains
throughout the week lifted prices to post a weekly rise of 0.4
percent, its third straight weekly gain.
    Total traded volume stood at 32,703 lots of 25 tonnes, a
little lower compared to the usual 35,000 lots as traders rushed
to take profits.       
    Palm oil could benefit from biodiesel policies in top
producers Indonesia and Malaysia as more of the tropical oil is
snapped up to produce the "greener" fuel. Biodiesel mandates in
soy producing Brazil and Argentina would harden rival soyoil
prices tracked by palm oil. 
    Global biofuel demand is expected to increase by at least
2.5 million tonnes next year, leading analyst Dorab Mistry said
at the Indonesia Palm Oil Conference and Price Outlook, and
could lift palm oil prices to 3,000 ringgit per tonne by March
2014. 
    "The demand for biodiesel has increased and the timely
implementation of higher biodiesel mandates in Malaysia and
Indonesia may provide a boost to the palm oil sector," said the
world's largest oil palm planter by landbank, Sime Darby Bhd
, in a results statement on Friday. 
    But traders say the palm market needs more than biodiesel
demand for prices to rally as bigger supplies of the tropical
oil drag.
    "According to the latest estimates, Malaysia could produce
about 4-4.5 percent more than 2012. That's why each time the
market tries to rally, it cannot reach 2,700 ringgit. Every
attempt ends up with profit-taking," the Malaysia-based trader
added.
    The No.2 producer churned out 18.79 million tonnes of palm
oil in 2012, and is expected to see about 19.4 million tonnes in
2013 and 19.5 million tonnes in 2014 as replanting schemes take
root, according to industry regulator the Malaysian Palm Oil
Board. 
    Technicals showed a bullish target at 2,692 ringgit per
tonne for Malaysian palm oil, as a correction from a Nov. 22
high has been completed, Reuters market analyst Wang Tao said.
   
    In other markets, Brent crude firmed slightly on Friday and
was set to post the biggest monthly gain since August as
prolonged unrest in Libya kept supply disruptions in focus.
                 
    In competing vegetable oil markets, the most active May
soybean oil contract on the Dalian Commodities Exchange
rose 1 percent in late Asian trade. The U.S. soyoil market was
closed for the Thanksgiving holiday. 
  Palm, soy and crude oil prices at 1037 GMT
                                                                                                                    
  Contract        Month    Last   Change     Low    High  Volume
  MY PALM OIL      DEC3    2615    -5.00    2610    2620     228
  MY PALM OIL      JAN4    2649    -6.00    2641    2674    2523
  MY PALM OIL      FEB4    2653    -3.00    2644    2678   16242
  CHINA PALM OLEIN MAY4    6366   +40.00    6312    6370  756338
  CHINA SOYOIL     MAY4    7330   +74.00    7256    7334  835558
  CBOT SOY OIL     JAN4   40.35    +0.00    0.00    0.00       0
  NYMEX CRUDE      JAN4   92.61    +0.31   92.06   92.64   22771
                                                                                                                    
  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=3.22 Malaysian ringgit)

 (Editing by Alan Raybould and James Jukwey)