Crude palm oil futures on Malaysia’s derivatives exchange declined Tuesday as investors locked in profits ahead of industry data due later in the week, market participants said. The benchmark March contract at Bursa Malaysia Derivatives ended 1% lower at 2,393 ringgit a metric ton after falling as much as 1.5% to MYR2,382/ton, the lowest since Dec 21.
Palm oil has started the year on a negative note, tumbling 3.3% so far due to concerns about export demand in January. Trade is likely to remain biased to the downside for the rest of the week, weighed by ample palm oil supplies as well as forecasts for a large soybean crop from South America, said S. Paramalingam, executive director at Malaysia-based brokerage Pelindung Bestari Sdn. Bhd. "Demand remains anemic. Buyers aren’t enthusiastic about buying in volumes," Mr. Paramalingam said.
Palm oil stock levels in Malaysia, the world’s second-largest producer, probably reached 2.51 million metric tons in December, slightly down from November’s record high, due to declining export demand, analysts and industry executives said. The estimate is a 2% decline from November’s all-time high of 2.56 million tons, according to a Dec. 10 report by industry regulator, the Malaysian Palm Oil Board.
Investors are also likely to monitor export trends to see whether Malaysia’s new export tax reduction has helped to boost orders from major palm oil importer India, a vegetable oil exporter in Pasir Gudang said. The MPOB as well as cargo surveyors Intertek Agri Services and SGS (Malaysia) Bhd. are scheduled to issue their data Thursday. Open interest on the BMD was 170,094 lots, versus 167,047 lots Monday. One lot is equivalent to 25 tons. A total of 42,454 lots of CPO were traded versus 58,065 lots Monday. [Dow Jones Newswire]
U.S. soybean futures slumped Tuesday on projections that larger-than-expected harvests in South America will reduce demand for the U.S. crop, while corn futures edged higher. Brent crude rose in heavy trading on Tuesday and U.S. crude dipped as the beginning of the annual rebalancing of a key commodities index widened the spread between the two contracts. [Reuters]
Today’s Support and Resistance for benchmark March contract is located around 2,360 and 2,430 respectively.
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