Fri Feb 18, 2011 11:56am IST
* Volatility set to continue in 2011 -analyst
* Palm oil set for biggest weekly loss in 6 months
By Michael Taylor
JAKARTA, Feb 18 (Reuters) - Malaysian palm oil futures
reversed gains to slip into negative territory on Friday, taking
direction largely from other oil markets, as traders watched for
possible food import tax changes in China.
The benchmark May 2011 crude palm oil contract on
Bursa Malaysia Derivatives fell 0.2 percent to 3,715 Malaysian
ringgit ($1,219) a tonne after touching a low at 3,688 ringgit.
Overall, traded volume stood at 7,042 lots of 25 tonnes
each, compared with a total of 20,321 lots on Thursday.
"This morning, all other markets are raised," said one
trader. "From crude oil to Dalian, so we've seen some selling
pressure."
"The trading range is very big -- 100 ringgit," he added.
Chicago soybean futures fell 0.8 percent on Friday and corn
lost around half a percent as expiry of March options later in
the day pressured the grain markets.
On Feb. 10, palm oil prices touched 3,967 ringgit, a peak
not seen since March 2008, on concerns that seasonally heavy
rains have stalled harvesting in top producers Indonesia and
Malaysia.
"We expect huge palm oil price volatility in 2011 as global
oilseed and edible oil inventories are at multi-year lows and
there is little room for error," Credit Suisse said in a note.
"Palm oil prices will swing depending on news flow on
weather," the note added. "Palm oil prices could touch 4,000
ringgit a tonne again, but we strongly believe that this price
is unsustainable for a long period of time."
Prices this week have fallen around 6 percent in
volatile trading sessions, on a mixture of profit taking
and worries that prices had overrun the bullish fundamentals.
The palm oil benchmark is set to notch its biggest weekly
loss since August 2010.
CHINA IN FOCUS
On Thursday, the catalyst for losses, as prices hit a three
week low at 3,648 ringgit, was talk of a possible cut in a range
of import taxes in China.
Malaysian and Singapore traders dealing with China said
Beijing may reduce import duties for soybean oil to 5 percent
from 9 percent and cut soybean import taxes to 1 percent from 3
percent while keeping palm oil duties at 9 percent.
The most-active Sept 2011 soyoil on the Dalian
Commodity Exchange eased to 10,466 yuan versus an open
at 10,560 yuan.
"Yesterday's fall caused by rumours about soybean import tax
cut is just a kneejerk reaction, but I think the cut could
happen anytime," said Zhang Juan Cong, an oil analyst with Dadi
Futures in China southern city of Hangzhou.
"No matter what the new tax will be, supply-demand
fundamentals won't change in the short term."
Global palm oil production stands at about 45 million tonnes
per year, with China buying around 7 million tonnes.
No comments:
Post a Comment