Malaysia's palm oil futures flat Monday
SINGAPORE: Malaysian palm oil futures were almost flat on Monday, as lower palm oil stocks in the country offset a slightly bearish report by the US Department of Agriculture (USDA) last week.
The USDA raised its global stockpile estimate for soybeans against expectations of a slight decline, and as a result also increased the inventory of soybean oil, a scenario that could shift some demand away from competing palm oil.
"By itself, the news of the higher soybean oil inventory should be slightly negative to crude palm oil prices as both commodities are commonly used as the substitute for each other," Alan Lim Seong Chun, research analyst with Malaysia’s Kenanga Investment Bank, told clients in a note.
"But despite the short-term weakness seen, price downside should be limited, due to the expected decline in Malaysia’s palm oil stocks."
Malaysia’s February palm oil stocks fell 5.2 per cent to 2.44 million tonnes from 2.58 million in January, industry regulator Malaysian Palm Oil Board said after the midday break.
The inventory fall was less than the drop to the 2.42 million level expected in a Reuters survey for stocks in the world’s No.2 palm oil producer.
At market close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange was almost unchanged at RM2,449 per tonne, but was off a high of RM2,467, a level unseen since February 26.
Total traded volume stood at 31,687 lots of 25 tonnes each, higher than the usual 25,000 lots.
The slightly bearish USDA data and high vegetable oil stocks also weighed on Chinese soybean oil, with the most-active September soybean oil contract on the Dalian Commodity Exchange falling to the lowest since July 2010.-- Reuters