BR:Palm oil edges lower as euro zone worries weigh
SINGAPORE: Malaysian palm oil futures edged lower on Monday, as traders turned cautious after a radical bailout proposal for Cyprus rattled investors, triggering a broad-based decline in other commodities markets.
Euro zone finance ministers asked Cyprus savers to forfeit a portion of their deposits in return for a 10 billion euro ($13 billion) bailout for the island, sparking fears of fresh turmoil in the euro zone.
"It seems like Europe is back to the headlines for the wrong reasons," said Ker Chung Yang, investment analyst with Phillip Futures in Singapore. "We have probably seen the last of the rally last week, and this week could be the beginning of a downturn or corrections in the commodities market."
By the midday break, the benchmark June contract on the Bursa Malaysia Derivatives Exchange had fallen 0.7 percent to 2,399 ringgit ($766) per tonne. Prices traded in a tight range between 2,395 to 2,417 ringgit.
Total traded volume stood at 35,268 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technical analysis indicates Malaysian palm oil is expected to revisit its March 14 low of 2,360 ringgit per tonne, as a rebound from this level has completed, said Reuters market analyst Wang Tao.
Palm oil futures also continued to come under pressure from a weak soy market which is suffering from poor export demand and higher South American supply, losing 1.4 percent last week.
But seasonally lower output in Malaysia may help ease stocks and support prices, especially after cargo surveyor data on Friday showed firm export demand.
Malaysian palm oil shipments for the first half of the month were slightly better compared to the same period last month, with cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reporting a 0.2 and 4.6 percent increase respectively.
In other markets, Brent crude dropped below $109 a barrel on Monday in its steepest fall in nearly three weeks as the dollar strengthened on the bailout proposal for Cyprus.
In other vegetable oil markets, US soyoil for May delivery lost 0.9 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange also edged 0.3 percent lower.
