RTRS:VEGOILS-Palm oil hits lowest since Oct after US credit downgrade
* Concerns growing over commodity demand outlook
* Technicals show palm oil likely falling below 3,000 rgt
* Palm oil demand outlook still solid as it's the cheapest
oil
(Adds comment, detail)
By Niluksi Koswanage
KUALA LUMPUR, Aug 8 (Reuters) - Malaysian palm oil futures
dropped on Monday to its lowest in more than nine months, as
investors were concerned over global economic growth and the
outlook for commodity demand after the United States lost its
top AAA credit rating.
Palm oil has lost over 20 percent so far this year with
losses at the start of the week coming from broad-based
commodity declines with debt crisis looming in the United States
and the euro zone.
Asian shares also slid and the dollar touched a record low
versus the Swiss franc, as global policymakers' pledge to take
whatever actions needed to steady financial markets did little
to pacify nervous investors.
"Investors are cutting back some positions but in palm oil
the declines are not so pronounced as it is the cheapest
vegetable oil and consumers will fall back on this," said a
trader with a foreign commodities brokerage.
By midday, the benchmark October contract KPOc3 on the
Bursa Malaysia Derivatives Exchange fell 1.2 percent to 3,015
Malaysian ringgit ($1,000) per tonne -- lowest since late
October.
Traded volumes stood at 17,890 lots at 25 tonnes each, down
from the usual 12,500 lots.
Reuters analyst Wang Tao said a bearish target at 2,950
ringgit per tonne has been established for Malaysian palm oil
based on its wave pattern and a channel technique.
Bursa Malaysia raised margin requirements for palm oil
trading, dealers said on Monday, in what could be an pre-emptive
measure against a possible route in Asian markets in the light
of the Western debt crisis and also ahead of long holidays in
September.
"The exchange could be raising its margin requirements ahead
of the Eid al-Fitr festival in early September to deter
excessive market swings and risk taking," said a trader with
local commodities brokerage.
Palm oil is still holding up better than other commodities
thanks to robust demand. Although traders are expecting cargo
surveyors this week to report a decline in August 1-10 palm oil
exports, the fall will be limited as big buyers may take
advantage of the lower prices to lock in orders.
Also, industry regulator Malaysian Palm Oil Board is likely
to show palm oil stocks easing from an 18-month high in July as
demand last month outpaced weaker production.
U.S. soybeans slid to a one-month low, weighing on other
vegetable oil markets. The falls were muted as investors eyed a
key government report later this week that will shed light on
U.S. corn and soybean crops after heat stress last month.
U.S. soyoil for August delivery dropped 1.3 percent
in Asian trade. The most active May 2012 soyoil contract
on China's Dalian exchange fell 0.1 percent.
Palm, soy and crude oil prices at 0604 GMT
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 = 3.013 Ringgit)
