VEGOILS-Palm extends gains to 4-wk high ahead of key industry report

Reuters

(Updates prices)

* Market awaits Sept. output due Thursday

* Prices climb to 2,371 rgt in late trade, highest since

Sept. 10

* Palm oil targets 2,401 ringgit- technicals

* Indonesian biodiesel policy will keep stocks in

check-analyst

By Anuradha Raghu

KUALA LUMPUR, Oct 9 (Reuters) - Malaysian palm oil futures

climbed to their highest level in four weeks on Wednesday as

investors bet a key industry report would show that palm stocks

and output growth in September were lower than anticipated.

Industry regulator the Malaysian Palm Oil Board (MPOB) will

release official data on September's palm stocks, production and

exports in the world's second-largest grower on Thursday.

The market has been buoyed by a Reuters survey on Monday

that put end-September stocks at a six-month high of 1.91

million tonnes, but that is still below some estimates.

"There's some position-squaring ahead of the MPOB report,"

said a Malaysian trader with a local commodities brokerage.

"But it looks like the current prices have factored in most

of the bullish news. I anticipate the upside will be capped

between 2,360-2,370 ringgit until more is known about

September's production," the trader added.

The benchmark December contract on the Bursa

Malaysia Derivatives Exchange touched 2,371 ringgit ($741) in

late Wednesday trade, its highest since Sept. 10, before easing

to 2,368 ringgit by the close, up 0.8 percent from the previous

session.

Total traded volume stood at 25,983 lots of 25 tonnes each,

much lower than the usual 35,000 lots.

Technicals showed a bullish target at 2,401 ringgit per

tonne remains unchanged for Malaysian palm oil as

indicated by an inverted head-and-shoulders and a Fibonacci

retracement analysis, Reuters market analyst Wang Tao

said.

The weaker local currency in late trade also supported

prices, making the feedstock cheaper for overseas buyers. The

Malaysian ringgit inched down 0.17 percent against the

U.S. dollar.

Analysts say palm oil prices, which are still down about 3

percent this year, may have found a floor, helped by top

producer Indonesia's ambitious biodiesel policy that could mean

more of the tropical oil will be used in making biofuels.

"This will ensure that any significant palm oil supply

increase can be converted into biodiesel, and hence keep

inventory levels in check," said Kenanga Investment Bank analyst

Alan Lim in a report on Wednesday.

He forecast average crude palm oil prices in 2013/14 would

range between 2,400-2,700 ringgit per metric tonne.

In other markets, global oil prices dropped below $110 per

barrel on Wednesday after U.S. lawmakers made little progress to

end a budget impasse that threatens to hurt investor confidence

and curb demand in the world's biggest oil consumer.

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

for December rose 0.1 percent in late Asian trade. The

most active January soybean oil contract on the Dalian

Commodities Exchange rose 0.9 percent.

Palm, soy and crude oil prices at 1004 GMT

Contract Month Last Change Low High Volume

MY PALM OIL OCT3 2365 +15.00 2354 2365 165

MY PALM OIL NOV3 2370 +21.00 2351 2370 2002

MY PALM OIL DEC3 2368 +19.00 2350 2371 12034

CHINA PALM OLEIN JAN4 5528 +32.00 5506 5564 321544

CHINA SOYOIL JAN4 7056 +66.00 7006 7088 630160

CBOT SOY OIL DEC3 40.46 +0.03 40.35 40.61 5759

NYMEX CRUDE NOV3 103.46 -0.03 103.19 103.75 11797

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=3.198 Malaysian ringgit)

(Editing by Richard Pullin and Alan Raybould)

View Comments (0)