Global vegetable oil markets mostly fall

Global vegetable oil markets mostly fell on Tuesday as investors took profits after multi-month highs the previous day, although expectations of strong holiday demand from China continued to offer support. Concerns that erratic weather will curb production of soybeans in South America and China as well as Canadian canola are bolstering agriculture markets.
Malaysian palm oil eased 0.3 percent by the midday break, after hitting a near 16-month high on Monday, while US October soyoil was little changed during Asian hours, just below a 2-year high hit the previous day. China's most-active May 2011 palm olein futures edged down 0.97 percent and May 2011 soybean oil eased 0.3 percent.
"Prices are still on the high side. The markets are simply making some adjustment and will trade in a tight range today," said a trader in a foreign brokerage in Malaysia. "But China's demand remains firm. They need to replenish their stocks as they are moving to another holiday this week," the trader said, adding palm oil is likely to trade within 2,700-2,770 ringgit per tonne.
Expectations of strong Chinese demand come as the US currently harvests a record soy crop. The pace of the soybean harvest was the fastest since 2005, according to USDA data that goes back to 1982. There are concerns of tight grains and oilseed supplies next year. Traders are expecting lower soy acreage in the US in the next season, dry weather ahead of planting in South America and still lacklustre palm oil production in Indonesia and Malaysia.
Reuters technical analysis showed a bullish target at 2,800 ringgit per tonne for Malaysian palm oil remained intact, as it is poised to develop an explosive rally. Markets rallied strongly on Monday as traders bet on top buyers Asian buyers snapping up more cargoes in the months to come, with Malaysian palm oil futures hitting their highest level since May 2009.
The rally was also due to traders adjusting their positions after markets opened in China this week after a long holiday. Chinese financial markets will close again on Friday for the week-long National Day holiday. "There's a technical correction as the market price was high the previous day, moreover investors may not risk taking positions ahead of the holidays," said Zhan Zhi Hong, an oil analyst for Shenzhen-based China Merchant Futures.