Malaysian palm oil futures edged down on Thursday, snapping four straight days of gains as investors covered short positions ahead of a key industry report that arrived in the mid-day break, but robust export demand capped losses.
Cargo surveyor data earlier showed that exports of the tropical oil surged 17.2 per cent in the October 1-10 period compared to a month ago, thanks to increased purchases from the world’s top two palm oil buyers India and China.
The market has climbed 2.7 per cent so far this week, supported by forecasts from traders and planters showing that stocks and output volumes in the world’s second-largest producer might not have grown as much as earlier estimated.
"The market has been up for the past four days - there’s some short-covering today," said a trader with a foreign commodities brokerage.
Data from industry regulator the Malaysian Palm Oil Board (MPOB), released after the mid-day break, showed palm oil stocks in September grew by seven per cent to 1,784,397 tonnes against a revised 1,668,132 tonnes at the end of August. Output grew 10.2 per cent.
The weak rise in stocks missed market estimates that inventories at the world’s No.2 palm oil producer climbed 14.8 per cent to 1.91 million tonnes.
By the mid-day break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had edged down 0.1 per cent to RM2,367 per tonne. Prices traded in a right range between RM2,359-RM2,374.
Total traded volume stood at 14,998 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technicals showed Malaysian palm oil still targets RM2,401 per tonne, as indicated by an inverted head-and-shoulders and a Fibonacci retracement analysis, Reuters market analyst Wang Tao said.
Brazil has forecast that its 2013/14 soybean crop would surpass last season’s record by as much as 10 per cent and make it the world’s top producer, its governemnt crop supply agency Conab said on Wednesday.
Harvesting of US soybean crops is also expected to advance rapidly due to dry weather, an agricultural meteorologist said on Wednesday.
Larger supplies of soybeans for crushing into soyoil could channel some food and fuel demand away from palm oil, a rival vegetable oil.
In other markets, Brent steadied above US$109 per barrel on Thursday, following steep overnight losses as data showed US
crude stocks rose by the most in a year last week.
In competing vegetable oil markets, the US soyoil contract for December rose 0.1 per cent in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange rose 0.3 per cent.-- Reuters