VEGOILS-Palm ends higher, trade thin ahead of Malaysian industry report

Reuters

(Updates prices, adds Reuters poll estimates)

* Malaysian palm oil stocks seen at 6-mth high in Sept -

Reuters survey

* Market subdued before Oct. 10 stocks and production report

* Palm oil remains neutral at 2,270-2,332 ringgit

-technicals

* U.S. shutdown could weigh on palm prices if U.S. dollar

weakens -trader

By Anuradha Raghu

KUALA LUMPUR, Oct 7 (Reuters) - Malaysian palm oil futures

ended higher for the third straight day on Monday but trade was

thin, with most investors steering clear of risky bets as they

waited for an industry report on palm stocks and production in

the world's second-biggest producer.

Stocks in September may have jumped to 1.91 million tonnes,

their highest in six months, as strong seasonal output trumped

robust export demand, a Reuters survey showed on Monday.

Production is expected to surge 15 percent in September from

a month before as oil palm trees seasonally produce more fruit.

Stockpiles could climb above 2.0 million tonnes again, putting

more downward pressure on prices, which have lost 5 percent so

far this year.

Stocks surged to a record high of 2.67 million tonnes last

December but had shrunk to 1.67 million tonnes at the end of

August.

Official data for September's end-stocks, exports and output

will be released by the industry regulator, the Malaysian Palm

Oil Board (MPOB), on Thursday, Oct. 10.

"Markets are quiet today, especially with Dalian closed.

Traders are preparing for the MPOB release," said a trader with

a local commodities brokerage.

Chinese markets, including the Dalian Commodities Exchange,

are closed for a public holiday and will reopen on Tuesday.

By Monday's close, the benchmark December contract

on the Bursa Malaysia Derivatives Exchange had edged up 0.6

percent to 2,318 ringgit ($726) per tonne. Prices traded in a

tight range between 2,303 and 2,329 ringgit.

Total traded volume was thin at 26,984 lots of 25 tonnes

each, much lower than the average 35,000 lots.

Technicals showed that Malaysian palm oil remained neutral

in a range of 2,270 ringgit to 2,334 ringgit per tonne, Reuters

market analyst Wang Tao said.

The shutdown of the U.S government could weigh on palm

prices if the situation is prolonged.

The uncertainty could drag on the U.S. dollar against

the ringgit, making the ringgit-priced palm feedstock

more expensive for overseas buyers and refiners. The ringgit was

trading slightly lower at 3.1880 per dollar late on Monday.

"It may indirectly affect palm in the sense that the U.S.

dollar will weaken, and in turn strengthen the ringgit, which

will put pressure on the palm oil market," said a Kuala

Lumpur-based trader.

In other markets, Brent crude fell more than 1 percent to

below $108 a barrel on Monday as oil production resumed in the

Gulf of Mexico after a tropical storm, while concern over the

U.S. government shutdown clouded the outlook for demand.

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

for December edged down 0.2 percent in late Asian trade.

Palm, soy and crude oil prices at 1012 GMT

Contract Month Last Change Low High Volume

MY PALM OIL OCT3 2350 +11.00 2310 2353 343

MY PALM OIL NOV3 2320 +5.00 2308 2332 1981

MY PALM OIL DEC3 2318 +13.00 2303 2329 13842

CHINA PALM OLEIN JAN4 - - - - -

CHINA SOYOIL JAN4 - - - - -

CBOT SOY OIL DEC3 40.17 -0.07 40.06 40.49 4679

NYMEX CRUDE NOV3 102.61 -1.23 102.50 103.59 19244

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=3.191 Malaysian ringgit)

(Editing by Alan Raybould)

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