KUALA LUMPUR, Mar 28: Malaysian palm oil futures fell to a more-than-one week low on Thursday as the market consolidated below the prior session’s slight gains, with investors staying away from risky moves and awaiting key industry export data due next week.
Fears over Cyprus’s bailout deal damaging the euro zone’s fragile recovery roiled global financial and commodity markets, including palm, most of this week and kept investors on edge.
Palm’s dismal export performance in the first 25 days of the month also came as a negative surprise to market players and weighed on prices, which have lost more than three percent so far this week. Exports fell 7.5 percent March 1 to 25 compared with a month ago due to a slowdown in crude palm oil shipments.
Traders are now waiting for cargo surveyor data on exports for the full month, due next Monday, and industry regulator data on output and inventory, due in mid-April, to gauge palm’s direction in the coming months.
‘The market is consolidating and is still unsure — there’s no new factor currently moving this market,’ said a trader with a foreign commodities brokerage in Malaysia.
‘Everything depends on the production in March. If production this month is lower, then you will see stocks breaking below 2 million tonnes for sure,’ he added.
By the midday break, the benchmark June contract on the Bursa Malaysia Derivatives Exchange had inched down 1.1 percent to 2,420 ringgit ($779) per tonne. Prices earlier fell to 2,411 ringgit, the lowest level since March 19.
Total traded volume stood at 18,731 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technicals for the next quarter were bearish for Malaysian palm oil. Prices are expected to fall to 1,953 ringgit, indicated by its wave pattern and a Fibonacci ratio analysis, said Reuters market analyst Wang Tao.
Stockpiles in Malaysia in February, the world’s No.2 producer, inched down 5 percent from January to currently stand at 2.4 million tonnes. Stocks had hit a record high of 2.63 million tonnes in December as strong production and tepid global demand caused prices to tumble more than 20 percent in 2012.
Traders say total exports of palm oil products in March need to rise above 1.5 million tonnes for prices to recover, but also stressed that output of the vegetable oil will play a big role.
‘It’s very critical this month. If the base production is low this month, then for the next few months you’ll still have a low base,’ the Malaysia-based trader said.
In other markets, Brent futures held above $109 a barrel on Thursday on hopes of a revival in demand growth in the world’s biggest oil consumer the United States following a surprise fall in product inventories, while worries over Europe’s debt problems capped gains.
In vegetable oil markets, U.S. Soyoil for May delivery lost 0.5 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange inched down 0.5 percent.
(AGENCIES)
Trending Now
E-Paper
Follow our WhatsApp channel