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CPO futures fell to a four-month low on Friday November 21, down on losses in related vegetable oil futures, a firmer ringgit and buying sentiment bogged down by higher output and bearish export sentiment.
The most active February CPO futures contract on the Bursa Malaysia Derivatives Exchange closed 87 ringgit per tonne, or 2.09% lower, at 4,068 ringgit ($985) per tonne to the lowest level since July 7, extending declines from the morning session when it closed at 4,149 ringgit per tonne.
All contracts were down by 61-95 ringgit per tonne at the time of close.
On a weekly basis, the most active CPO futures contract has fallen 2% from the previous Friday’s settlement of 4,128 ringgit per tonne, tracking losses in soybean oil futures as well as bearish fundamentals.
In China, vegetable oil futures were lower across the board, with the most active January palm olein contract on the Dalian Commodity Exchange falling 2.24% to 8,550 yuan ($1,203) per tonne, while the equivalent soybean oil contract declined 1.30% to 8,190 yuan per tonne.
The January rapeseed oil futures contract on the Zhengzhou Commodity Exchange, however, rose by 0.53% to 9,816 yuan per tonne, with local rapeseed oil demand steady and stocks being drawn down amid no fresh news on trade relations between China and largest canola supply Canada.
In the cash market, around 2,000-3,000 tonnes of CPO traded at $1,090.00-1,092.50 per tonne CFR west coast India (WCI) and 10,000 tonnes of CPO also traded at $1,083 per tonne CFR east coast India (ECI) for December shipment.
Offers for CPO to India were around $1,087.50-1,090.00 per tonne CFR WCI toward the end of the day, with buying ideas around $1,080 per tonne CFR though no strong buying interest was heard amid the decline in CPO futures.
Offers for January-shipment cargoes were also at $1,100 per tonne CFR and $1,110 per tonne CFR WCI for January-March shipment.
Earlier in the day, there were discussions for Indonesian CPO for December shipment at $1,055-1,065 per tonne FOB Indonesia, while olein discussions for the same month were at $1,000-1,010 FOB Indonesia, but discussions became subdued in the late afternoon with market participants withdrawing to the sidelines.
Production estimates for November 1-20 from the Southern Peninsular Palm Oil Millers Association (SPPOMA) were reported at 10.32% higher compared with the same period in October, when production in the first 20 days of October was estimated 2.71% higher than September 1-20.
The firm increase was partially attributed to the higher number of working days between November 1-20 and October 1-20, though the double-digit growth could imply a smaller slowdown in the pace of production in November, with many expecting Malaysia’s November total output to fall from October as production comes off the seasonal peak.
The rise reflects still higher production supported by favorable weather conditions and steady yields, particularly from estates in Johor and other southern regions.
Malaysian exports for the first 20 days of November were also reported sharply down by 40.62% on the month to 471,222 tonnes, according to cargo surveyor SGS. This is a bigger drop than the 14-20% to 831,005 tonnes and 828,680 tonnes reported by cargo surveyors Intertek Testing Services (ITS) and Amspec respectively.
Soyoil for loading between April and July was heard traded on a CFR WCI basis at $1,065-1,070 per tonne.
CME soyoil futures traded with losses for the second straight session, mainly pressured by a drop in crude oil, while market participants continued to assess impacts of US biofuels policy changes.
The most active January CME soyoil contract went down by 0.79% on the day to 50.55 cents per lb at 1pm US Eastern time.
Lower crude oil weighed on soyoil futures in the session, extending losses for a third session. The US pushed for a peace deal between Russia and Ukraine, which prompted renewed concerns of oversupply on energy markets.
Rumors of a potential delay in implementing a US 50% penalty over tax credits generated by biofuels made with imported feedstocks remained in focus.
Soyoil prices have been pressured down amid speculations of a potential postponement of the policy change, as the penalty could boost domestic demand for the US feedstock.
Meanwhile, CME soymeal futures moved slightly higher, underpinned by product spreading with stronger soyoil, while lower corn prices capped part of the positive pressure.
The most liquid January soymeal contracts went marginally up by 0.16% to $318.10 per short ton at 1pm US Eastern time.
In the Americas, soyoil bases markets were less active with the holiday in Argentina and a lot of market participants absent on Friday after a federal holiday in Brazil on Thursday and ahead of the weekend.
However, South American bases for short-term loading rose from the previous assessment, on Wednesday November 19. The January basis was assessed at a discount of 0.8 cents per lb in Argentina and at a premium of 0.4 cent per lb in Brazil, both to January futures.
On Thursday November 20, during the holiday in Brazil, the basis for December loading in Argentina had traded at discounts of 5.5 and 3 cents per lb to December futures.
The January basis in Brazil increased $3 per short ton compared with the previous assessment, at a discount of $10 per short ton to January futures.
In Argentina, the corresponding soymeal basis increased by $1 per short ton compared with the previous price, assessed at a discount of $3.5 per short ton to the same futures contract.
As of 6:10pm Central European time, Euronext February rapeseed futures traded at €480 ($552) per tonne, down by €4.25 from the previous market close.
FOB Rotterdam rapeseed oil (RSO) prices declined along the curve on Friday, reversing gains from the previous session. RSO was down in line with a weaker global vegetable oils complex at the end of the trading week, while fresh losses in European rapeseed futures and Canadian canola futures weighed further on prices.
Rapeseed meal prices in the Amsterdam-Rotterdam-Antwerp-Ghent (ARAG) region also fell on Friday, keeping producers’ crush margins under pressure. The outlook for rapeseed remained mixed this week due to ongoing uncertainty in European biofuel policy – particularly to do with Germany’s implementation of the next iteration of the Renewable Energy Directive.
December RSO offers were heard around €1,095 per tonne, with buying interest ranging €1,080-1,083 per tonne, compared with offers at €1,105 per tonne at bids in the €1,090-1,092 per tonne range on Thursday.
For January volumes, offers stood at €1,085 per tonne, while buying interest ranged €1,070-1,075 per tonne, compared with offers mostly heard around €1,095 per tonne and bids at €1,085 per tonne on Thursday.
For the February-March-April (FMA) strip, offers were reported at €1,069-1,080 per tonne, with buying interest in a narrow €1,065-1,066 per tonne range. This compared with offers around €1,082 per tonne and bids of €1,076-1,078 per tonne at Thursday’s close.
No fresh RSO trades were heard out in the open on Friday.
Prices for FOB sunflower oil (SFO) across six EU ports also declined on Friday, pressured by weakness in the wider vegetable oils complex and the softer tone in the Black Sea market.
December SFO offers were heard predominantly at $1,365 per tonne, although there were no buyers out in the open closer to this level. On Thursday, offers for material were heard at $1,370 per tonne, against buying interest at $1,345, but with no trades reported either.
For the January-February-March (JFM) window, sources reported offers at $1,330 per tonne, with bids at $1,310 per tonne. This compared with offers heard around $1,330 per tonne and buying interest in the $1,310-1,320 per tonne range on Thursday.
No new SFO trades were indicated on Friday.
The Black Sea sunflower oil market was quiet on Friday, with only modest activity observed. Russia-origin offers for full-December shipment were reported at $1,307-1,310 per tonne CIF Mersin, while buyers indicated ideas near $1,295 per tonne.
In Izmir, offers were heard at $1,285-1,290 per tonne CIF, levels that correspond to roughly $1,300-1,305 per tonne CIF Mersin, while bids around $1,280 per tonne in Izmir translated to about $1,295 per tonne CIF Mersin. These levels continued to outline the workable range for Russia-origin cargo.
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