Malaysian crude palm oil futures slipped on Tuesday as worries about rising supplies were rekindled and as dealers booked profits after the market hit a three-week high in the morning session.
The benchmark November contract on the Bursar Malaysia Derivatives Exchange settled down 15 ringgit, or 0.6 percent, at 2,459 ringgit ($701) a tonne, after going as high as 2,501 ringgit in the session, a level not seen since August 13.
"Profit-taking is taking place as the market was rising since last week until concrete plans on the Indonesian export taxes were announced," said a leading trader.
"It's a case of buy on rumour and sell on fact." Other traded months fell between 10 and 28 ringgit, except the May 2008 contract, which was unchanged. Overall volume stood at 10,710 lots of 25 tonnes each. Indonesia has adjusted the base export prices for palm oil products to bring them in line with international prices, the trade ministry said on Monday.
The government also introduced new export taxes for palm oil products in an effort to stabilise domestic cooking oil prices. Palm oil, used in products ranging from confectionery and cosmetics to biofuels, is around 11 percent below an historic high of 2,764 ringgit reached in June.
"Exports have been very kind in the past one month and it should be going higher but production is expected to jump, which would result in a possible supply glut," said another trader.
Asian vegetable oil demand has picked up from July as buyers from the Middle East to China lock in supplies for the festive season, especially for the Muslim holy month of Ramazan and the Chinese mid-Autumn festival, both due this month.
Malaysia's August palm oil exports rose 14 percent to 1,236,540 tonnes from 1,084,062 tonnes shipped in July, cargo surveyor Interlake Testing Services said on Saturday.
Another cargo surveyor, Society General de Surveillance, said exports in the same period rose 15.9 percent to 1,264,422 tonnes. But the Southeast Asian country's palm oil reserves in August are expected to rise as much as 20 percent due to the current seasonal uptake in production.
November palm oil on Singapore's Joint Asian Derivatives Exchange fell $3 to $712 a tonne with only one lot traded. In the physical market, crude palm oil for September shipments in Malaysia's southern region was quoted at 2,520/2,530 ringgit a tonne. Trades were done between 2,525 and 2,545 ringgit.
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