RTRS:VEGOILS-Palm drops to one-week lows on cloudy global outlook
* Festival demand strong but overshadowed by global economic
outlook
* India snaps up 50,000 tonnes of RBD palm olein for
festival demand
(Updates with prices, comment and details)
By Niluksi Koswanage
KUALA LUMPUR, Sept 22 (Reuters) - Malaysian palm oil dropped
to one-week lows on Thursday after the U.S. Federal Reserve
warned of significant risks to the world's largest economy,
building on concerns of a recession stalling commodity demand
growth.
Palm oil prices have been see-sawing in September, torn
between the bleak global economic outlook and prospects of
strong demand ahead of key public holidays in top buyers India
and China next month.
But on Thursday, traders were certain the market could break
below 3,000 ringgit if the broad-based sell-off in global
markets continued on economic pessimism.
"Palm oil is finally reacting to a sell-off. The question we
should ask is: once the festival season is over, what happens
them?" said a trader with a foreign brokerage in Malaysia.
By midday, benchmark December palm oil FCPOc3 on the Bursa
Malaysia Derivatives Exchange fell 1.3 percent to 3,026 ringgit
($967.55). It earlier dropped to 3,010 ringgit a tonne -- the
lowest since Sept. 14.
Overall volumes were light, with 9,139 lots of 25 tonnes
each changing hands, compared to the usual 12,500 lots.
Reuters analyst Wang Tao said palm oil is technically
neutral as it is consolidating within a triangle in a range of
3,000 to 3,083 ringgit per tonne.
Palm oil has lost 20 percent so far this year on high stocks
and a slowdown in demand after the Muslim Eid festival late in
August.
But last minute orders are likely to pour in ahead of
India's Diwali festival in late October and China's Golden Week
holiday early next month.
India struck deals for 50,000 tonnes of refined, bleached
and deodorised palm olein from Indonesia in the last week,
traders said, in an immediate reaction to Jakarta's tax cut on
exports of processed oils from September 15.
Brent crude lost more than $1 on Thursday on concerns oil
consumption may fall, as steps announced by the U.S. Federal
Reserve were seen as possibly insufficient to jump-start an
economy the central bank said faces significant downside risk.
U.S. soyoil for October delivery fell 0.6 percent in
the wake of crude oil's decline. The most active May 2012
soybean oil contract on China's Dalian Exchange lost 1.4
percent.
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. cents per pound
Dalian soy oil in Chinese yuan per tonne
Crude in U.S. dollars per barrel
($1=3.127 Malaysian Ringgit)
(Editing by Clarence Fernandez)
((niki.koswanage@thomsonreuters.com)(+603 2333 8035)(Reuters
Messaging:)(niki.koswanage.thomsonreuters.com@thomsonreuters.net
)
