SINGAPORE, Aug 10: Malaysian crude palm oil futures slipped to an 8-week low on Friday, and were heading for a fifth straight weekly loss as traders priced in an exports slowdown that has contributed to a build up in stocks.
Malaysia palm oil stocks hit a five-month high of nearly 2 million tonnes, almost in line with market expectations, industry regulator Malaysian Palm Oil Board said after the midday break.
And the build up could continue well into August as cargo surveyor data showed Malaysiabn exports for the first ten days of this month fell 1.8 percent from a month ago.
‘Macroeconomic factor is affecting demand. With a slowing economy, people are just consuming less,’ said a trader with a Singapore-based commodities house.
‘Exports should have been good last month, but that didn’t happen and still this month exports are down further.’
By the midday break, the benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange had lost 0.6 percent to 2,847 ringgit ($914) per tonne. Prices touched a low of 2,844 ringgit, a level last seen on June 15.
Futures are trading 2.4 percent lower this week, after chalking four straight weeks of losses.
Total traded volumes stood at 9,009 lots of 25 tonnes each, thinner than the usual 12,500 lots.
On the technicals front, palm oil will test support at 2,838 ringgit to break it and then fall rapidly towards 2,760 ringgit, Reuters market analyst Wang Tao said.
Exports of the edible oil remain sluggish with cargo surveyor Intertek Testing Services reported Aug 1-10 exports at 357,372 tonnes, compared to 363,975 tonnes a month ago.
Another cargo surveyor Societe Generale de Surveillance will issue data later in the day.
As festival demand has eased, traders are hoping that the recently announced tax-free crude palm oil export quotas of 2 million tonnes could help bolster demand and help reduce stocks in coming months.
Oilseeds supply could tighten in coming months as Indonesia, the world’s top palm oil producer, lowered its earlier output forecast by 8 percent this year, an agriculture ministry official said late on Thursday.
The U.S. Department of Agriculture (USDA) will release its monthly supply and demand report at 1230 GMT on Friday that is likely to show a tighter soy output and squeeze soybean oil supply, shifting some demand to palm oil.
Brent crude fell below $113 a barrel on Friday as a sharp slowdown in China’s trade flows heightened fuel demand worries, though these were partly offset by hopes that the world’s second biggest economy would ease monetary policy and so boost oil use.
In other vegetable markets, by 0534 GMT, the most active U.S. Soyoil contract for December delivery had lost 0.5 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had gained 0.2 percent.
Palm and soy oil prices at 0535 GMT
Contract Month Last Change Low High Volume MY PALM OIL AUG2 2750 -67.00 2750 2750 0 MY PALM OIL SEP2 2805 -22.00 2801
2828 0 MY PALM OIL OCT2 2847 -18.00 2844 2874 0 CHINA PALM OLEIN JAN3 7782 -36.00
7772 7884 159494 CHINA SOYOIL JAN3 9668 +16.00 9662 9758 305284 CBOT SOY OIL DEC2 52.91 -0.29 52.91 53.48 4769
Palm oil prices in Malaysian ringgit per tonne CBOT soy oil in U.S. Cents per pound Dalian soy oil and RBD palm olein in Chinese yuan per tonne
($1=3.114 Malaysian ringgit)
(AGENCIES)
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