Palm oil eases on renewed euro zone concerns, weather eyed
Friday, 6 January 2012
SINGAPORE, Jan 5 (Reuters): Malaysian crude palm oil futures slipped Thursday on rekindled investor caution over the euro zone debt crisis, although weather concerns in oilseed growing regions limited losses.
A French bond auction due later in the day renewed jitters about the ability of euro zone countries to refinance their debt, a concern that drove palm oil prices down last year for their first annual loss since 2008.
Traders are also eyeing prospects of dry weather in South America lowering soy yields and heavy rains in Southeast Asia disrupting palm oil production and boosting prices.
"There is not much activity, probably because it's the beginning of the year. The weather is definitely a concern here," said a trader with a foreign commodities brokerage in Malaysia.
Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange closed 1.1 per cent lower to 3,190 ringgit ($1,000) per tonne.
Traded volumes for palm oil futures Thursday stood at 16,400 lots of 25 tonnes, thinner than the usual 25,000 lots.
"Traders are still cautious and it is still early to judge the severity of drought in South America," said another dealer with a foreign commodities brokerage in Malaysia.
Palm oil futures will fall to 3,139 ringgit per tonne, according to a wave analysis and Fibonacci retracement, said an analyst Wang Tao.
The Malaysian Meteorological Department issued a warning that heavy rains may last till the weekend in the key oil palm growing states of Johor, Pahang, Sabah and Sarawak, which account for almost three quarters of national palm oil output.
While there have not been any reports on serious disruption due to floods, investors are watching the weather development closely as stocks in No.2 producer Malaysia are likely to fall to a five-month low in December.
Brent crude rose toward $114 a barrel Thursday as fears of an Iranian supply disruption mounted after the European Union agreed to cut off oil imports from the No. 2 OPEC producer, offsetting jitters over the euro zone crisis.
In other vegetable oil markets, weather worries in Argentina continued to be a bullish factor.
US soyoil for January delivery gained 0.1 per cent in Asian trade while the most active Sept 2012 soyoil contract on China's Dalian commodity exchange rose 0.13 per cent.
A French bond auction due later in the day renewed jitters about the ability of euro zone countries to refinance their debt, a concern that drove palm oil prices down last year for their first annual loss since 2008.
Traders are also eyeing prospects of dry weather in South America lowering soy yields and heavy rains in Southeast Asia disrupting palm oil production and boosting prices.
"There is not much activity, probably because it's the beginning of the year. The weather is definitely a concern here," said a trader with a foreign commodities brokerage in Malaysia.
Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange closed 1.1 per cent lower to 3,190 ringgit ($1,000) per tonne.
Traded volumes for palm oil futures Thursday stood at 16,400 lots of 25 tonnes, thinner than the usual 25,000 lots.
"Traders are still cautious and it is still early to judge the severity of drought in South America," said another dealer with a foreign commodities brokerage in Malaysia.
Palm oil futures will fall to 3,139 ringgit per tonne, according to a wave analysis and Fibonacci retracement, said an analyst Wang Tao.
The Malaysian Meteorological Department issued a warning that heavy rains may last till the weekend in the key oil palm growing states of Johor, Pahang, Sabah and Sarawak, which account for almost three quarters of national palm oil output.
While there have not been any reports on serious disruption due to floods, investors are watching the weather development closely as stocks in No.2 producer Malaysia are likely to fall to a five-month low in December.
Brent crude rose toward $114 a barrel Thursday as fears of an Iranian supply disruption mounted after the European Union agreed to cut off oil imports from the No. 2 OPEC producer, offsetting jitters over the euro zone crisis.
In other vegetable oil markets, weather worries in Argentina continued to be a bullish factor.
US soyoil for January delivery gained 0.1 per cent in Asian trade while the most active Sept 2012 soyoil contract on China's Dalian commodity exchange rose 0.13 per cent.