Advertisement

VEGOILS-Palm prices bounce after oil rebound; supply squeeze anticipated

(Updates prices, adds SGS data, updates weather warning for Sabah)

* Malaysia Jan 1-15 palm exports fall 12-13 pct m/m -cargo suveyors

* Palm oil to rise to 2,412 ringgit -technicals

* Indonesia keeps Jan crude palm oil export tax at zero

By Anuradha Raghu

KUALA LUMPUR, Jan 15 (Reuters) - Malaysian palm oil futures rose on Thursday after a recent climb in

crude oil, with prices underpinned by concerns over a squeeze in the tropical oil's supply as the No.2 grower

braces for monsoon rains over the Borneo region.

Growers in Peninsular Malaysia are facing the aftermath of the worst monsoon floods in decades which

destroyed palm oil transportation and processing infrastructure in the worst-hit states, making worse the

weakness in palm yields already low due to seasonal reasons.

Malaysia's meteorological department indicates that the monsoon has now shifted to Borneo, bringing rains

to top palm-growing states Sabah and Sarawak.

The department warned of heavy rains over Sarawak that are expected to last until Saturday, while

thunderstorms and strong winds are seen hitting Sabah late Thursday.

"Prices are generally being supported because of tightness in nearby oil," said Chandran Sinnasamy, a

trader at LT International Futures in Malaysia.

"Even though demand is not good, people want to wait and see whether January's production is within

expectations, or worse."

The benchmark March contract rose 1.0 percent to 2,367 ringgit ($665) per tonne by Thursday's

close.

Total traded volume stood at 66,704 lots of 25 tonnes, above the usual 35,000 lots.

Exports of Malaysian palm products fell 13 percent to 535,651 tonnes in the first half of January

compared to a month ago, cargo surveyor Intertek Testing Services reported, on weaker shipments to top buyers

China, India and Europe.

Another surveyor Societe Generale de Surveillance showed that exports for the same period fell 11.8

percent.

Traders say that despite sluggish exports, prospects of a dent in supply due to the monsoon and firm

technical charts are attracting buying interest.

"Prices have been supported above 2,320 ringgit in the last three to four days, and that is encouraging

buyers to come into the market to test the 2,380 ringgit level," said Chandran.

Elsewhere, the world's top palm oil producer Indonesia has kept its crude palm oil export tax at zero for

January, allowing duty-free exports for the fourth straight month. Crude palm exports from Malaysia will be

tax-free until the end of February.

Crude oil prices fell on Thursday, with both Brent and U.S. WTI futures dropping around one dollar

because of a global oversupply, following a volatile session the previous day when prices had rebounded

sharply from near-six-year lows.

In vegetable oil markets, the U.S. soyoil contract for March rose 0.5 percent in late Asian trade,

while the most active May soybean oil contract on the Dalian Commodity Exchange gained 0.1 percent.

Palm, soy and crude oil prices at 1019 GMT

Contract Month Last Change Low High Volume

MY PALM OIL JAN5 0 +0.00 0 0 0

MY PALM OIL FEB5 2381 +21.00 2379 2409 794

MY PALM OIL MAR5 2367 +23.00 2356 2394 23811

CHINA PALM OLEIN MAY5 4956 -12.00 4900 4974 428382

CHINA SOYOIL MAY5 5636 +6.00 5576 5650 390866

CBOT SOY OIL MAR5 33.00 +3.40 32.96 33.46 12952

INDIA PALM OIL JAN5 462.50 +3.40 461.40 465.90 1045

INDIA SOYOIL JAN5 672.45 +2.20 671.50 674.50 13195

NYMEX CRUDE FEB5 47.67 -0.82 47.16 49.59 50456

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

India soy oil in Indian rupee per 10 kg

Crude in U.S. dollars per barrel

($1 = 3.5620 Malaysian ringgit)

($1 = 6.1881 Chinese yuan)

($1 = 61.92 Indian rupee)

(Editing by Joseph Radford and Biju Dwarakanath)