In The News - 23/11/2005

The European vegetable oil market [OILS/E] saw some business in palm oil and lauric oil on Wednesday sparked some short covering and a weaker dollar, market sources said.

"Palm oil saw some business on short covering with Malaysian palm oil futures and lauric oils found some demand at lower levels. The easier dollar also helped a little," one broker said.

At 1750 GMT CBOT soyoil futures <0#3BO:> were 0.43 to 0.15 cents per lb down from Tuesday.

Palm oil was offered $2.50 to $5 up after Malaysian palm oil futures <0#PKO:> closed eight to 11 ringgit up on covering and with Chicago soyoil.

December delivery palm olein traded at $400 a tonne fob Malaysia, Jan/March fetched $402.50 and April/June changed hands at $405. December was switched into April/June with $9 difference.

November shipment crude palm oil traded $5 up from Tuesday at $440 a tonne cif Europe, Jan/March traded $2.50 up at $437.50 and $440 was paid for April/June.

Liquid oils were offered flat to four euros down, but buyers showed little interest at the offered levels and no business was seen, dealers said.

Lauric oils were offered up to $5 down after Jan/Feb coconut oil traded $5 down at $570 and Feb/March changed hands at $577.50 a tonne cif Rotterdam. Palmkernel oil traded at $600 a tonne cif Rotterdam for Nov/Dec and Jan/Feb traded at $597.50 a tonne cif Rotterdam.

Malaysian palm oil saw modest gains by Wednesday's midsession, halting a two-day slide, as the market took its cue from a rebound in rival U.S. soyoil.

The third-month crude palm oil contract on Bursa Malaysia Derivatives, February <KPOG6>, entered the lunch break up 2 ringgit at 1,405 ringgit ($371.74) a tonne.

Overall trade volume stood at 1,416 lots of 25 tonnes each -- little changed from Tuesday morning's 1,471 lots. The market typically sees 3,000 lots or more in a busy first session. 

"Some short covering and technical buying lifted prices, but overall sentiment is still not strong," said a trader.

Players were wary as February touched 1,400 ringgit in the morning, sparking fears that the key support could be broken.

Prices have taken a hit in recent weaks after poor export numbers of palm oil following long holidays in early November for the Hindu Diwali and Muslim Eid al-Fitr festivals.

Societe Generale de Surveillance, a cargo tracker closely watched by the industry, said on Monday Malaysian exports of oil palm products for Nov. 1-20 were estimated to have fallen 14 percent, compared with October 1-20 period.

Volatile swings in U.S. soyoil have also weighed on palm oil prices. Soy and palm compete for exports and their prices often move in step.

Soyoil futures on the Chicago Board of Trade closed up on Tuesday, with the key December contract gaining 0.05 cent to 21.98 cents per lb. But in Wednesday's electronic trade <0#ZL:> conducted during day hours in Asia, December was down 0.06 cent.

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