Vegoils commentary: CPO, soyoil futures soften; European cash markets active
Crude palm oil (CPO) futures gave up gains from the previous day to end in negative territory on Tuesday March 26 following profit-taking activities and pressure from weaker related vegoils futures.
The most-active CPO futures contract on Bursa Malaysia for June-delivery slipped 0.24% to 4,237 ringgit ($896) per tonne with trade largely rangebound during the day, with profit-taking and a stronger ringgit limiting gains along with downward pressure from weaker related vegoils futures.
Chinese vegoil futures closed lower on March 26, with the most-active palm oil contract on the Dalian Commodity Exchange down by 0.41% to 8,266 yuan ($1,146) per tonne while the equivalent soybean oil contract decreased by 0.54% to 7,784 yuan per tonne.
The most-active rapeseed oil contract on Zhengzhou Commodity Exchange fell by 1.32% to 8,208 yuan per tonne.
The ringgit, which is the currency used to trade CPO futures, also strengthened by 0.17% against the US dollar, making CPO less attractive to buyers holding other currencies.
Healthy export demand coupled with softer-than-expected growth in production has continued to provide underlying support to the futures, with CPO futures also consolidating gains from recent days.
Palm oil production in Peninsular Malaysia continued steadily recover in March versus February.
Figures from the Southern Peninsular Palm Oil Millers Association (SPPOMA) put production for March 1-25 up by 12.3% compared with the previous month, though the pace slowed compared with the 22.4% increase reported for March 1-20.
Lower output in East Malaysia is also expected to weigh on the country’s overall production growth, particularly in Sarawak, with earlier estimates from the Malaysia Palm Oil Association showing March 1-20 production down by 10.34% month on month, while Sabah’s production was 5.16% lower than the same period in February.
In the physical market, Chinese buyers booked one olein cargo for April-shipment, with the traded price heard at $999 per tonne CFR south China, while around 3,000-4,000 tonnes of CPO for April shipment was traded at $1,030-1,032.50 per tonne CFR west coast India.
CPO offers to India were also hovering at $1,035-1,040 per tonne CFR west coast India (WCI) for April and $1,015-1020 per tonne CFR WCI for May cargoes through the day.
In the Americas, soyoil futures slid on Tuesday due to pressure from weaker Malaysian palm oil futures and positioning ahead of the key US Department of Agriculture (USDA) reports that will be released on Thursday March 28.
The May soyoil contract on the Chicago Mercantile Exchange (CME) fell by 0.9% to 48.57 cents per lb at the time of publication.
Lower trade followed positioning ahead of USDA’s grain stocks and planting intentions reported and followed the steep increases on Monday March 25.
Malaysian palm oil futures’ weaker tone and the mixed performance in Chinese Dalian futures further weighed on prices.
Soymeal futures dropped by 0.3% day on day, with May CME contracts trading at $340.6 per short ton at the time of publication.
Weakness in grain and soybean futures pressured the soymeal market lower while product spreading dynamics capped losses.
Rains helped replenish soil moisture levels in the US Midwest, easing concerns about planting and contributing to a weaker tone across the soybean complex.
Meanwhile, China’s dispute with the US at the World Trade Organization over subsidies created uncertainty in global trade.
A container ship accident at the port of Baltimore in the US disrupted trade routes, but did not have major impacts on the flow of agricultural commodities.
In the physical market, Argentinian soyoil for May loading was heard traded at a discount of 8.2 cents per lb on Tuesday although this could not be confirmed at the time of publication.
The May soyoil basis in Brazil fell by 0.65 cents per lb day on day, to a discount of 7.4 cents per lb to underlying CME May futures.
Brazilian soymeal for May loading fell $3 per short ton on Tuesday to a premium of $0.50 per short ton to underlying futures.
In Argentina, the same basis was assessed at a premium of $3 per short ton to May futures, down by $2.50 per short ton from Monday.
The European rapeseed and sunflower oil markets were active on Tuesday ahead of the Easter weekend with strong trade volumes for both.
Sunflower oil in six European ports was offered at $955 per tonne FOB for shipment in April/May/June, $10 per tonne higher than the day before.
Several sunflower oil trades were heard in six European ports on an FOB basis: three trades for sunflower oil for July/August/September loading at $975 per tonne, and one trade was heard at $965 per tonne for October/November/December shipment.
Rapeseed oil for shipment in May/June/July was offered at €925 ($1,001.36) per tonne against buyers’ idea of €918 per tonne FOB Rotterdam.
In addition, rapeseed oil trades were heard at €919 ($995) per tonne for loading in May/June/July at €915 per tonne, and at €919 per ton, €920 per tonne FOB Rotterdam for shipment in August/September/October, respectively.
There was little demand for Sunflower oil in the Black Sea region from Turkish buyers, whose ideas of a tradeable level were at $860-865 per tonne, while sellers’ levels were around $875 per tonne CIF Mersin.
At the same time was a sunflower oil trade was heard at $860 per tonne CIF Mersin for April delivery.
Spot buyers at the ports said the workable level was $780-785 per tonne CPT Pivdennyi, while offer levels were heard from $760 per tonne FCA and $790 per tonne CPT Pivdennyi.