VEGOILS-Palm ends higher as ringgit eases, optimism on low stocks supports

Reuters

(Tweaks lead to reflect price change, updates prices)

* Prices post weekly gain of 0.9 pct, second in a row

* Stronger ringgit weighs, but palm still resilient - trader

* Palm oil targets 2,346 ringgit - technicals

By Anuradha Raghu

KUALA LUMPUR, Oct 18 (Reuters) - Malaysian palm oil futures ended higher on

Friday, reversing some losses in the morning session after the ringgit eased a

little, while hopes of only a slight rise in stocks lifted prices to post their

second weekly rise in a row.

Prices hit their highest in more than five weeks on Thursday on optimism

that output volumes in Malaysia, the world's second-largest producer, may not

surge as much as expected earlier, prompting investors to book profits.

The ringgit fell 0.1 percent to 3.1525 in late Friday trade, but

gained 0.8 percent this week, rising along other emerging Asian currencies after

U.S. lawmakers struck an 11th-hour deal to avoid a sovereign debt default.

Traders say the palm market is robust on prospects of a meek rise in

production growth in October, which along with strong demand could keep stocks

below 2 million tonnes in 2013.

"There's some pressure coming in from the strong ringgit -- but the current

level shows the market is quite resilient. It might try to go up to 2,450

ringgit," said a trader with a foreign commodities brokerage in Kuala Lumpur.

"Stocks could stay below 2 million tonnes this year. Output will peak next

month, but it will be a minimal rise."

By Friday's close, the benchmark January contract on the Bursa

Malaysia Derivatives Exchange had edged up 0.1 percent to 2,402 ringgit ($760)

per tonne. Prices earlier dipped to 2,378 ringgit.

Total traded volume stood at 28,174 lots of 25 tonnes each, lower than the

usual 35,000 lots.

Palm oil prices have risen 3.5 percent so far in October and posted a weekly

gain of about 0.9 percent, supported by healthy demand.

Cargo surveyor data showed that exports of Malaysian palm oil in the first

half of October rose to 781,043-799,853 tonnes, about 7-12 percent higher from a

month earlier as purchases from Europe and China increased.

"China won't stop importing palm because they are very price sensitive. The

price spread between soy and palm is still in favour of palm," the trader added.

Refined palm olein's discount to soyoil is currently around $119.

Market players will be waiting for export data for the Oct 1-20 period, due

on Oct. 21, to gauge demand.

Production from Indonesia, the world's top producer, could also be curbed

due to a government rule that limits plantation areas to just 100,000 hectares

for new palm oil firms, threatening an ambitious output goal of 40 million

tonnes by 2020, an industry group said on Friday.

Technicals were a little bearish. Malaysian palm oil may break support at

2,365 ringgit and fall further to 2,346 ringgit per tonne, as indicated by a

Fibonacci retracement analysis, Reuters market analyst Wang Tao said.

In other markets, Brent crude futures held steady at around $109 a barrel on

Friday after strong Chinese Q3 GDP data was offset by poor September oil demand

in the world's second largest oil consumer.

In competing vegetable oil markets, the U.S. soyoil contract for December

rose 0.3 percent in late Asian trade. The most-active January soybean oil

contract on the Dalian Commodities Exchange fell 0.1 percent.

Palm, soy and crude oil prices at 1023 GMT

Contract Month Last Change Low High Volume

MY PALM OIL NOV3 2394 +2.00 2374 2395 250

MY PALM OIL DEC3 2401 +7.00 2375 2401 4923

MY PALM OIL JAN4 2402 +3.00 2378 2404 16049

CHINA PALM OLEIN MAY4 6020 +30.00 5940 6034 429630

CHINA SOYOIL JAN4 7170 -4.00 7130 7192 299258

CBOT SOY OIL DEC3 41.45 +0.33 41.04 41.46 7377

NYMEX CRUDE NOV3 100.99 +0.32 100.52 101.04 9917

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=3.16 Malaysian ringgit)

(Editing by Richard Pullin and Prateek Chatterjee)

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