SINGAPORE: Malaysian palm oil futures slipped on Wednesday on euro zone caution and thin trading volumes, but losses were limited by erratic weather that threatens to tighten supply in palm oil producer Malaysia.
Investor caution set in over the chance for more progress in resolving the lingering euro zone debt woes after officials agreed to boost a rescue fund and seek more aid from the International Monetary Fund.
Traders are also expecting a slow week as industry players attend the Indonesia Palm Oil Conference and Price Outlook 2012, which starts on Wednesday.
"The market is simply tracking external markets such as the CBOT. It has been the third day that it is trying to break below the 3,050-ringgit level," said a dealer in Kuala Lumpur.
By midday, benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 0.3 percent to 3,054 Malaysian ringgit ($960) per tonne. Prices dropped as low as 3,052, just a little higher than the two-week low hit on Friday.
Overall traded volumes stood at 6,086 lots of 25 tonnes each, much thinner than the usual 12,500 lots.
Industry analysts, including Dorab Mistry and James Fry, will present their views at the conference on Friday. For more stories on the Bali conference, click
Reuters analyst Wang Tao expects palm oil to hover above a support at 3,050 ringgit per tonne for one trading session as it refused to continue a downtrend after touching that level.
Heavy monsoon rains and a seasonal decline in yields are expected to lower Malaysia's November palm oil production, which some traders said may fall by 15 to 18 percent.
The Malaysia Meteorological Department issued a yellow stage warning that heavy rain may persist till Saturday and cause floods over low-lying areas in parts of Pahang -- a key oil palm growing area that accounts for 15 percent of production in Malaysia.
But exports have also started to come off a little and any further declines may provide relief to tightening stocks.
Cargo surveyor Intertek Testing Services said Malaysian palm oil exports for November fell 8.8 percent to 1.53 million tonnes, in line with industry sources' expectation.
Another cargo surveyor, Societe Generale de Surveillance, will issue its exports data later on Wednesday.
In related markets, Brent crude stayed above $110 on Wednesday, retaining its previous session gains, as Iran's escalating tensions with the West and an agreement by euro zone ministers to ramp up the firepower of their bailout fund helped support prices.
But concerns over the euro zone bailout progress weighed on other vegetable oil markets. US soyoil for December delivery slipped 0.8 percent while China's most active May 2012 soybean oil contract lost 0.4 percent.
Comments
Comments are closed.