RTRS:VEGOILS-Palm down on weak exports, tight supply in focus
* Weak exports weigh on futures, tight oilseed supply
supports
* Weather concerns coming to Asia with El Nino fears
* Coming up: USDA crop production report at 1230 GMT
(Updates prices, adds details)
By Chew Yee Kiat
SINGAPORE, July 11 (Reuters) - Malaysian crude palm oil
futures slipped on Wednesday on weaker export data, although
losses were curbed by tight global oilseed supply and
expectations that demand will rise in the next few weeks due to
Asian festivals.
The declines in palm oil bucked grain futures, which have
risen as a drought in the U.S. grain belt hurts crops, and were
mainly driven by a decline in Malaysian palm oil exports for the
first 10 days of July, pointing to a decline in demand.
"Despite the lower end-stocks yesterday, demand is slipping
away," said a trader with a local commodities brokerage in
Malaysia. "Empirical evidence suggests end-stocks could recover
back up to 2 million tonnes by end September."
Benchmark September palm oil futures on the Bursa
Malaysia Derivatives Exchange slipped 1.5 percent to close at
3,082 ringgit ($970) per tonne.
Traded volumes stood at 27,591 lots of 25 tonnes each,
slightly higher than the usual 25,000 lots.
Malaysian July 1-10 palm oil exports fell by 13.5 and 22.2
percent respectively, according to cargo surveyors Intertek
Testing Services and Societe Generale de Surveillance, taking
most traders by surprise.
The market is also on the lookout for the U.S. Department of
Agriculture (USDA) report on grain supplies, due to be released
at 1230 GMT, with soybean stocks expected to remain tight
following the persistent drought.
But some traders expect demand to pick up by the end of the
month, when the Muslim fasting month of Ramadan begins, and then
again once top buyers China and India observe major holidays in
September through to November.
Palm oil is currently priced lower than other vegetable
oils, which also means it is likely to attract buyers.
"Price signals in India are favouring palm oil imports over
soybean and sunflower oil. The premium of both sunflower and
soybean oil to crude palm oil are at or above recent averages,"
Victor Thianpiriya, agricultural analyst with ANZ, said in a
research note.
Concerns about El Nino may also boost prices. Japan's
weather bureau said on Tuesday there is a strong possibility the
weather pattern -- which is often linked to droughts in
Southeast Asia and could hurt palm oil output -- will emerge
this summer.
"We expect crude palm oil prices to surge if El Nino is
confirmed as fresh fruit bunch production may be reduced by a
staggering 30 percent depending on the severity of El Nino,"
Alan Lim Seong Chun, research analyst with Malaysia's Kenanga
Investment bank, said in a note.
Brent rose above $98 a barrel on Wednesday, recovering
slightly from the previous session's losses, ahead of U.S.
inventory data that is expected to show crude stocks shrinking
for a third week in the world's largest oil consumer.
In other vegetable oil markets, U.S. soyoil for July
delivery lost 0.4 percent. The most active January 2013 soyoil
contract on the Dalian Commodity Exchange ended 1
percent lower.
"The Dalian market fell today mostly because traders were
cautious ahead of the USDA report tonight. Another reason could
be profit-taking from the earlier rally," said Zhang Ru Ming,
research manager with Liangyun Futures in Dalian.
Contract Month Last Change Low High Volume
MY PALM OIL JUL2 0 +0.00 3100 0 0
MY PALM OIL AUG2 3069 -57.00 3069 3144 1030
MY PALM OIL SEP2 3082 -48.00 3080 3161 18974
CHINA PALM OLEIN JAN3 8134 -124.00 8070 8306 466146
CHINA SOYOIL JAN3 9734 -96.00 9686 9880 813214
CBOT SOY OIL DEC2 54.79 -0.34 54.69 55.60 7884
NYMEX CRUDE AUG2 84.76 +0.85 84.01 85.00 19964
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
