Reuters: Financial Services and Real Estate: VEGOILS-Palm oil loses more ground, USDA report eyed

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VEGOILS-Palm oil loses more ground, USDA report eyed Mar 29th 2012, 04:47 Thu Mar 29, 2012 12:47am EDT * Drought woes in South America and firm demand limit losses * Price correction after palm oil hits one-year high on Tuesday * USDA quarterly inventory report and planting forecast due Friday (Updates prices, adds details) By Chew Yee Kiat SINGAPORE, March 29 (Reuters) - Malaysian palm oil futures slipped for a second day on Thursday, as traders booked more profit from a rally this week, although losses were curbed by soybean supply fears in South America and firm export outlook for palm oil. Palm oil could not breach the psychological 3,500 ringgit level this week, especially when market players were cautious ahead of the U.S. Department of Agriculture's quarterly inventory report and planting forecast due on Friday. "We see that palm oil prices have come to a one-year high, so it's not surprising that some profit-taking activities start to kick in, especially now as we are at the end of the month, some book squaring is going to happen," said Ker Chung Yang, an analyst at Phillip Futures in Singapore. "There could be some positioning ahead of this coming Friday's reports. Although the market is speculating that there could be more planted acres for corn, the reports could turn out to be a surprise and soybean prices could subsequently be weighed on that." By the midday break, benchmark June palm oil futures on the Bursa Malaysia Derivatives Exchange were trading down 0.5 percent at 3,455 ringgit ($1,126) per tonne. This week the market went as high as 3,497 ringgit, a level unseen since March 10 2011. Traded volumes were thin at 6,566 lots of 25 tonnes each, compared to the usual 12,500 lots. Palm oil investors are watching closely on the acreage battle between corn and soybean because a smaller planted area for soybean could boost demand for palm oil, which competes with crushed soybean oil in the vegetable oil market. Malaysian export data for the first 25 days of March pointed to an improvement in buying interest for the tropical oil compared to a month ago, and traders are expecting exports for the full month to end higher. Market players are also focusing on Malaysia's palm oil supply, which could be lower in March on the back of seasonality and the effect of biological stress. A lower palm oil production may push up prices further as global oilseed supply is tight especially as a drought in South America has disrupted soybean production. Brent crude held steady near $124 on Thursday as news of a surge in U.S. crude inventories and Western nations' talks on releasing strategic oil reserves offset supply disruption concerns over tension in the Middle East. In other vegetable oil markets, the most active U.S. soyoil contract for May gained 0.1 percent in Asian trade on the back of tight supplies of soybeans in drought-hit South America. Meanwhile, the most active September 2012 soyoil contract on China's Dalian Commodity exchange lost 0.7 percent. Palm, soy and crude oil prices at 0433 GMT Contract Month Last Change Low High Volume MY PALM OIL APR2 3465 -35.00 3465 3475 113 MY PALM OIL MAY2 3465 -17.00 3451 3466 645 MY PALM OIL JUN2 3455 -18.00 3445 3462 3817 CHINA PALM OLEIN SEP2 8666 -64.00 8628 8734 160274 CHINA SOYOIL SEP2 9650 -66.00 9610 9722 416166 CBOT SOY OIL MAY2 54.65 +0.05 54.50 54.83 4827 NYMEX CRUDE MAY2 105.32 -0.09 105.24 105.70 3421 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=3.0695 ringgit) (Editing by Niluksi Koswanage) Link this Share this Digg this Email Reprints

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