Palm oil has second weekly loss as China curbs price increase
Sunday, 28 November 2010
MUMBAI, Nov 27 (Bloomberg): Palm oil dropped for a second week after China, the biggest cooking-oil user, took steps to curb speculation in commodities to combat rising inflation, led by surging food costs.
February-delivery futures shed 1.6 per cent this week. The commodity had gained for 11 straight weeks through November 12 on increasing demand. Today, the price closed little changed at 3,274 ringgit ($1,035) a tonne.
The market "remained in a range in fear that China may soon take more action to curb increasing inflation," Vibhu Ratandhara, assistant vice president for research at Bonanza Commodity Brokers Pvt. said in an e-mail.
China's Dalian Commodity Exchange will increase margin requirements on palm oil, soybean, soybean meal, soybean oil, corn, polyethylene and polyvinyl chloride contracts to 10 per cent from November 29. The exchange also raised the contracts' daily trading limit to 6 per cent, it said in a statement.
China, the biggest user of commodities, has pledged to control prices by cracking down on the use of bank credit to speculate in agricultural markets and by selling soybeans and vegetable oil from state reserves.
September-delivery palm oil on the Dalian exchange lost 0.7 per cent to 8,626 yuan ($1,295) a ton and soybean oil for delivery in the same month closed 1.2 per cent lower at 9,350 yuan a ton, paring intra-day losses of as much as 2.5 per cent.
Palm oil may rebound next week as demand remained strong, Karvy's Hiremath said. Export data for November from Malaysia will be watched, he said.
Exports from Malaysia grew 18.9 per cent to 1.32 million tons in the first 25 days of the month compared with the same period in October, Intertek said yesterday. Shipments were 25 per cent higher at 1.36 million tons, Societe Generale de Surveillance said.
Global demand for eight vegetable oils including palm oil will be larger than output for the first time in eight years in 2010-2011, according to a Nov. 19 report from Oil World, which also said China's import reliance was at "an alarming level."
"Even as overall demand supply fundamentals increasingly point in favor of a firm market, prices may run up way too far too soon, and may cool down in the short while," Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said in an email. "This is supported by the possibilities of China digging deep into its rapeseed oil reserves in its attempt to ease rising inflation."
China may sell more rapeseed oil from reserves after the auction today failed to reduce prices significantly, said state- affiliated researcher Cnyouzhi.com. Two more auctions of 100,000 tons each may be planned in the next two weeks, it said. China only sold 70,300 tons of rapeseed oil out of 100,400 tons at an average price of 9,237 yuan ($1,388) a ton today, the National Grain & Oil Trade Center said on its website.
January-delivery soybean oil shed as much as 1.2 per cent to 49.99 cents a pound in after-hours trading in Chicago, while soybeans for January delivery lost as much as 1.3 per cent to $12.39 a bushel. US markets were closed yesterday for the Thanksgiving holiday.
CME Group Inc.'s March palm oil contract, pegged to the Malaysian benchmark price, gained as much as 1.3 per cent to $1,032.25 a ton.
February-delivery futures shed 1.6 per cent this week. The commodity had gained for 11 straight weeks through November 12 on increasing demand. Today, the price closed little changed at 3,274 ringgit ($1,035) a tonne.
The market "remained in a range in fear that China may soon take more action to curb increasing inflation," Vibhu Ratandhara, assistant vice president for research at Bonanza Commodity Brokers Pvt. said in an e-mail.
China's Dalian Commodity Exchange will increase margin requirements on palm oil, soybean, soybean meal, soybean oil, corn, polyethylene and polyvinyl chloride contracts to 10 per cent from November 29. The exchange also raised the contracts' daily trading limit to 6 per cent, it said in a statement.
China, the biggest user of commodities, has pledged to control prices by cracking down on the use of bank credit to speculate in agricultural markets and by selling soybeans and vegetable oil from state reserves.
September-delivery palm oil on the Dalian exchange lost 0.7 per cent to 8,626 yuan ($1,295) a ton and soybean oil for delivery in the same month closed 1.2 per cent lower at 9,350 yuan a ton, paring intra-day losses of as much as 2.5 per cent.
Palm oil may rebound next week as demand remained strong, Karvy's Hiremath said. Export data for November from Malaysia will be watched, he said.
Exports from Malaysia grew 18.9 per cent to 1.32 million tons in the first 25 days of the month compared with the same period in October, Intertek said yesterday. Shipments were 25 per cent higher at 1.36 million tons, Societe Generale de Surveillance said.
Global demand for eight vegetable oils including palm oil will be larger than output for the first time in eight years in 2010-2011, according to a Nov. 19 report from Oil World, which also said China's import reliance was at "an alarming level."
"Even as overall demand supply fundamentals increasingly point in favor of a firm market, prices may run up way too far too soon, and may cool down in the short while," Anand James, chief analyst at brokerage Geojit Comtrade Ltd., said in an email. "This is supported by the possibilities of China digging deep into its rapeseed oil reserves in its attempt to ease rising inflation."
China may sell more rapeseed oil from reserves after the auction today failed to reduce prices significantly, said state- affiliated researcher Cnyouzhi.com. Two more auctions of 100,000 tons each may be planned in the next two weeks, it said. China only sold 70,300 tons of rapeseed oil out of 100,400 tons at an average price of 9,237 yuan ($1,388) a ton today, the National Grain & Oil Trade Center said on its website.
January-delivery soybean oil shed as much as 1.2 per cent to 49.99 cents a pound in after-hours trading in Chicago, while soybeans for January delivery lost as much as 1.3 per cent to $12.39 a bushel. US markets were closed yesterday for the Thanksgiving holiday.
CME Group Inc.'s March palm oil contract, pegged to the Malaysian benchmark price, gained as much as 1.3 per cent to $1,032.25 a ton.