Oils Market Report Monday 9th January

Posted by Stelios Theocharous January 9, 2012 - 6:48 pm

Palm Oil Futures
Palm oil futures closed lower at the midday close following lower Asian equity and crude oil markets as well as persistent concerns over Euro zone debt concerns. Trading is relatively quiet this morning ahead of key export and production data due in the coming days. Some additional pressure is also coming from some easing concerns over weather conditions in parts of Malaysia. The market closed higher on Friday (up 15-21 ringgits) after the Malaysian Metrological Department raised its heavy rain warning for parts of Sarawak, a major palm oil producing state, increased concerns over a further fall in production this month. Some traders are now predicting that December palm oil production could fall by 7-9% compared to earlier estimates that production could fall as much as 15% to 1.39 million tonnes. End of December stocks are seen falling 5-6% to around 1.95-1.97 million tonnes, from 2.07 million at the end of November. At the same time demand is seen rising as soyoil’s premium to palm is rising due to concerns over lower production in South America.

Soybean futures
Soybean and soyoil futures closed lower on Friday (with soyoil futures sharply lower) as traders reduced some of their exposure in the absence of any new supportive fundamental news with some weather forecasts calling for rain in dry parts of Argentina this week. The market was seen as overbought after the market rallied recently over the potential for a La Nina weather pattern producing dry weather conditions in South America with hot and dry weather conditions encouraging traders to add a risk premium to the market. Some additional pressure also came from a higher Dollar (making US commodities more expensive) and weak export data. The USDA weekly export report showed soybean sales at 281,300 tonnes, well below market estimates for 400,000 to 600,000 tonnes. The electronic overnight market is trading higher this morning with soybeans up 7¾ to 10 cents and soyoil up 66-70 points on renewed weather concerns in Argentina with traders also positioning themselves ahead of the monthly supply and demand report from the USDA. Although there are no major changes expected for the US there are ideas that South American soybean production could be lowered due to less favourable weather conditions.

with thanks from Gary Lewis from Silbury, to contact please  email garylewis@silbury.co.uk