RTRS:VEGOILS-Palm oil slips on Europe debt concerns
* Euro zone debt issues weigh; investors look to output
* Rainy season and La Nina likely to hit output -traders
By Michael Taylor
JAKARTA, Nov 3 (Reuters) - Malaysian palm oil futures dipped
on Thursday, as risk-averse investors were spooked by
uncertainty surrounding the euro zone debt crisis, although
expectations of lower output kept a floor under prices.
Benchmark January palm oil futures FCPOc3 on the Bursa
Malaysia Derivatives Exchange traded 0.5 percent lower at 2,942
Malaysian ringgit ($939) a tonne after going as low as 2,938
ringgit.
Traded volumes for the January palm contract were thin at
2,597 lots of 25 tonnes each, compared with 12,369 lots on
Wednesday.
"This Greek sovereign debt issue has been dragging off and
on," said a Kuala Lumpur-based trader. "There is a lot of
uncertainty and that's the reason why palm cannot move (up).
"On the local front, it is supported by the weather
markets."
Asian shares, the euro and commodities all fell on Thursday
as fears that Europe's debt crisis could unleash financial chaos
prompted investors to shed riskier assets in favour of the
relative safety of the dollar.
The leaders of France and Germany, angered at Greece's shock
move to call a referendum on its latest bailout plan negotiated
last week, told Prime Minister George Papandreou that Athens
would not receive another cent in EU aid until it decides
whether it wants to stay in the euro zone.
Benchmark palm prices have gained as much as 9.2 percent
since hitting a multi-month low at 2,754 ringgit in early
October, partly on expectations of lower output in Southeast
Asia due to the onset of the rainy season.
The rainy season for more than a third of Indonesia, the
world's top palm oil producer, began in October, while it will
start this month for another third of the vast archipelago, the
state weather agency said in September.
"For palm fundamentals, they are looking quite good," said a
second Kuala Lumpur-based palm trader. "The weather factor is
coming -- in Malaysia it's raining every week.
In addition, La Nina-driven heavy rains at the end of the
year could also coincide with the monsoon season, stalling
harvesting and supporting palm oil futures that have lost around
20 percent so far this year.
At present, production appears to be strong with traders
expecting Malaysian palm oil stocks to record an increase
despite the strong export data reported for October.
In other news, Indonesia will not need to cut its palm oil
export tax system, if it agrees a rice import deal with India,
the state procurement agency Bulog and trade ministry in the
Southeast Asia country said on Thursday.
After meeting Indonesian officials in New Delhi on
Wednesday, India said it was willing to sell 500,000 tonnes of
rice to Indonesia but wanted Jakarta to cut its export tax on
crude palm oil which has threatened India's domestic refining
industry.
Malaysia, the world's No 2 producer, says its refiners are
suffering a price disadvantage after Jakarta slashed refined
palm oil export duties and tariffs for the crude grade to keep
more of the feedstock in Indonesia for processing.
In related markets, Brent crude LCOc1 futures slipped
below $109, sliding for a fifth straight session, on concerns
global oil demand will slide as the economic outlook for Europe
and the United States worsens.
U.S. soyoil for December delivery eased in Asian
trade, while China's most active May 2012 soybean oil contract
<0#DBY:> also dipped.
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 = 3.132 ringgit)
