VEGOILS-Palm ends higher, earlier losses attract bargain hunters
(Recasts, adds SGS export data, growers' estimates, trader and analyst quote)
* Malaysian March 1-25 exports fall 11.2-11.5 pct -surveyors
* Palm "terribly oversold", attracts bargain hunters -trader
* Prices fall to lowest since Feb 17 late in day, then rise
By Anuradha Raghu
KUALA LUMPUR, March 25 (Reuters) - Malaysian palm oil futures ended higher
on Tuesday, recouping from a drop early in the day to snap three days of losses
as low prices attracted bargain hunters, although poor export data put a lid on
gains.
The benchmark June contract on the Bursa Malaysia Derivatives
Exchange dipped to 2,682 ringgit per tonne late on Tuesday, their lowest since
Feb. 17, before rising 0.3 percent to settle at 2,710 ringgit ($821) by the
close.
Total traded volume amounted to 71,193 lots of 25 tonnes, more than double
the average 35,000 lots.
"We saw some bargain-hunting at the close on the premise that prices are
terribly oversold," a trader with a local commodities brokerage said. Palm
prices have lost more than 3 percent so far this month and are on track to post
a third straight weekly loss.
Weak export data also fuelled worries that major consumers would switch to
other edible oils, pressuring prices.
Data from cargo surveyor Intertek Testing Services showed that Malaysian
exports of palm oil products fell 11.5 percent to 927,290 tonnes for March 1-25,
compared with 1,048,311 tonnes in the same period last month, as India and China
cut back their purchases.
Another cargo surveyor, Societe Generale de Surveillance, provided data
showing that exports fell 11.2 percent in the same period.
Market participants expect that palm oil inventories in Malaysia, the
world's second-largest producer, will fall in March from February's level of
1.66 million tonnes after a two-month drought hurt the growth of palm fruit.
Traders said estimates from the Malaysian Palm Oil Association, a group of
planters, showed that palm oil output for March 1-20 rose only about 2 percent.
February production was at 1.28 million tonnes.
"Most analysts are saying that prices are supposed to go to 2,900-3,000
ringgit levels due to the tight supply situation. It looks like stocks are going
to fall below 1.6 million tonnes, but it will depend on production," another
Kuala Lumpur-based trader said.
Leading vegetable oil analyst Dorab Mistry last week forecast benchmark
prices would rise faster and hit 3,000 ringgit in April if the El Nino weather
phenomenon returns to curb yields from trees, which have already been stressed
by dry weather.
In the absence of El Nino, palm prices are likely to trade between 2,600 and
2,900 ringgit for the rest of the year, he said.
Higher prices would narrow palm oil's discount to other competing edible
oils, eating into demand as price-sensitive buyers turn to cheaper options.
"While we still expect firm demand from India, especially if the oilseed
harvest disappoints, the crude palm oil market will face stiffer competition
from fungible oils, especially soyoil," Standard Chartered commodities research
said in a note on Tuesday.
In other markets, oil edged up over $107 a barrel on Tuesday, supported by a
further drop in production in Libya and speculation China will act to support
its slowing economy.
In other competing vegetable oil markets, the U.S. soyoil contract for May
gained 0.2 percent in late Asian trade, while the most active September
soybean oil contract on the Dalian Commodities Exchange rose 0.2
percent.
Palm, soy and crude oil prices at 1032 GMT
Contract Month Last Change Low High Volume
MY PALM OIL APR4 2785 +4.00 2775 2795 625
MY PALM OIL MAY4 2738 +4.00 2710 2744 8977
MY PALM OIL JUN4 2710 +9.00 2682 2720 31629
CHINA PALM OLEIN SEP4 6126 -30.00 6072 6176 573290
CHINA SOYOIL SEP4 6866 +10.00 6818 6912 672440
CBOT SOY OIL MAY4 40.90 +0.06 40.64 41.22 5258
NYMEX CRUDE MAY4 99.90 +0.30 99.26 100.00 11250
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 = 3.30 Malaysian ringgit)
($1 = 6.2024 Chinese yuan)
(Editing by Anupama Dwivedi and Jane Baird)
