VEGOILS-Palm slips but posts best monthly gain since Dec 2010

Reuters

* Prices up 7.5 pct in August

* Intertek Testing Services to release Aug export data on

Saturday

* Biodiesel policies to increase local palm consumption

-minister

(Updates prices)

By Chew Yee Kiat

SINGAPORE, Aug 30 (Reuters) - Malaysian palm oil futures

eased on Friday as investors booked profits from this week's

rally that was fuelled by forecasts of dry weather in the

soy-producing U.S. Midwest, although healthy demand and a

still-weak ringgit stemmed the decline.

Bullish factors from expectations of lower soy yields to a

weaker ringgit have lifted palm oil this month, sending the

tropical oil to its best monthly performance since December 2010

with a 7.5 percent gain.

Palm oil is a close substitute of soybean oil. A weak

ringgit currency that helps improve margins for overseas buyers

has also supported prices.

Investors also expect August exports to be higher compared

to the prior month's after a 7 percent rise during the first 25

days. Cargo surveyor Intertek Testing Services will release the

full month's export data on Saturday.

"Optimism on August exports capped the downside ... But any

negative surprise on exports will pressure the market once more

as it is still overbought," said a dealer with a foreign

commodities brokerage in Kuala Lumpur.

On Friday, the benchmark November contract on the

Bursa Malaysia Derivatives Exchange lost 1.5 percent to close at

2,404 ringgit ($732) per tonne. Prices traded in a 2,396-2,433

ringgit range.

Total traded volume stood at 39,420 lots of 25 tonnes each,

higher than the average 35,000 lots.

Domestic consumption of palm oil in Malaysia, the world's

second-largest producer, could jump on its plans to increase

palm oil's blend in biodiesel to 10 percent from the current 5

percent, a government official said on Friday.

"By July 2014 the whole country will be using B5 ... we are

confident in the very near future we will be moving into B10,"

plantation industries and commodities minister Douglas Uggah

Embas told reporters at a press conference in Kuala Lumpur.

"External demand is beyond our control. But at least

domestically, with policies executed on biodiesel, we can

increase our local consumption," he added.

In other markets, Brent crude oil slipped below $115 a

barrel on Friday as fears over supply disruptions in the Middle

East eased after Britain said it will not join any military

action against Syria.

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

December eased 0.3 percent in late Asian trade. The

most-active January soybean oil contract on the Dalian

Commodities Exchange fell 1.3 percent.

Palm, soy and crude oil prices at 1003 GMT

Contract Month Last Change Low High Volume

MY PALM OIL SEP3 2407 -37.00 2400 2445 178

MY PALM OIL OCT3 2406 -38.00 2398 2432 3705

MY PALM OIL NOV3 2410 -30.00 2396 2433 20494

CHINA PALM OLEIN JAN4 5554 -100.00 5532 5598 546672

CHINA SOYOIL JAN4 7172 -92.00 7154 7214 748472

CBOT SOY OIL DEC3 44.09 -0.11 43.79 44.36 5812

NYMEX CRUDE OCT3 108.00 -0.80 106.75 108.20 30015

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=3.29 Malaysian ringgit)

(Additional reporting by Anuradha Raghu; Editing by Richard

Pullin and Muralikumar Anantharaman)

View Comments