SINGAPORE: Malaysian palm oil fell more than one per cent on Wednesday, hovering near one-month lows as prospects of rising global edible oil supplies and weakness in crude oil futures weighed on the market.
Palm oil production in Indonesia and Malaysia, the world top producers, is expected to start rising this month as tress enter the peak production cycle, while rainfall in the US Midwest is likely to boost yields of the moisture-stressed soybean crop.
"Even good export numbers are not helping the palm oil market recover," said one trader with a foreign commodities brokerage in Kuala Lumpur.
"We are entering the high production months for palm oil and the sentiment in global vegetable oil markets is also bearish.
Crude oil is under pressure because tensions in Syria are easing."
By the mid-day break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 1.2 per cent to RM2,328 per tonne. On Tuesday, the market fell to RM2,294, its lowest since August 20.
Total traded volumes stood at 8,936 lots of 25 tonnes each by mid-day.
Investors have turned bearish after leading industry analyst Dorab Mistry said Indonesia and Malaysia will seasonally produce more palm oil until at least April 2014. Mistry said this would add to the supply of competing oilseeds and drag prices to new lows in January.
Brent crude oil prices slipped below US$108 a barrel on Wednesday as Libya resumed output and as diplomatic talks to eliminate Syria’s chemical weapons started, easing worries that crude supply from the Middle East would be at risk.
The decline in palm oil prices comes despite strong demand for the tropical product.
Data from cargo surveyor Intertek Testing Services showed exports of Malaysian palm oil products from September 1-15 rose 13.6 per cent to 732,412 tonnes compared to August 1-15, due to higher purchases of crude palm oil and palm fatty acid distillates.
Another cargo surveyor Societe Generale de Surveillance showed exports rose 12.4 per cent for the same period.
Malaysia, the world’s No.2 palm oil producer, has decided to keep its crude palm oil export tax for October at 4.5 per cent, a government circular showed early Tuesday. The rate has been left unchanged since March.
In vegetable oil markets, the US soyoil contract for December fell 0.4 per cent to trade around its lowest since August 12. The most-active January soybean oil contract on the Dalian Commodities Exchange was largely unchanged on Wednesday.
On the technical front, Malaysian palm oil is expected to seek support at RM2,320 per tonne, as it did not break a resistance at RM2,362, according to Reuters market analyst Wang Tao.-- Reuters
Read more: Palm oil eases 1.2pc, near 1-month low http://www.btimes.com.my/Current_News/BTIMES/articles/20130918133905/Article/index_html#ixzz2fDoRppD8
