Malaysian palm oil tumbles

Malaysian palm oil futures hit their lowest in more than eight months on Friday, tracking falling overseas markets after key US data showed higher-than-expected crop prospects and stock levels. The US Agriculture Department's annual acreage and quarterly grain stocks reports showed ample supplies despite months of fretting over dwindling stockpiles that drove corn prices to record highs in recent weeks.
"Although the USDA report was quite friendly towards the prospect of soybean stocks and supplies, bearish news on corn has spilled over to soybean and soyoil futures in the previous session - pulling palm oil down," said a trader with a foreign brokerage in Kuala Lumpur.
The soy market was pressured after the USDA reported US June 1 soybean stocks at 619 million bushels, above the average trade estimate of 596 million bushels. The benchmark September crude palm oil contract on Bursa Malaysia Derivatives ended 1.2 percent lower at 3,035 ringgit ($1,005.133) a tonne, after touching 3,031 ringgit, the lowest level since October 27.
Overall traded volume was 26,914 lots of 25 tonnes each, slightly above the usual 12,500 lots. Palm oil prices, which had lost almost 20 percent in the first half of this year, are further pressured by expectations for stocks to soar above 2 million tonnes at a time when output is growing and overseas demand is likely to slow.
"Production is going to increase in July due to good weather in East Malaysia," said another trader in Kuala Lumpur, referring to the major oil palm planting state of Sabah on Borneo island. He added that political conflicts in the Middle East might slow palm oil exports ahead of the Muslim fasting month due to start in August. "Muslim countries in the Middle East are facing some problems, hence they're taking less palm oil, even though the festival is approaching," the same trader in Kuala Lumpur said.
Other vegetable oils were mixed in Asian hours after commodities the previous day posted their largest quarterly loss since the 2008 financial crisis. US soyoil for July delivery inched up on Friday on short-covering ahead of a long weekend. Markets in the United States are shut on Monday for a national holiday. The most active January 2012 soyoil contract on China's Dalian commodity fell 0.7 percent during Asian hours.