Palm oil falls over two percent

Malaysian palm oil futures snapped a four-day rally on Wednesday, falling more than 2 percent as eurozone debt jitters weighed on prices, although losses were capped by expected demand ahead of the Muslim fasting month of Ramazan in July. European shares slipped and the euro touched a 23-month low on Wednesday as investors worried that Spain's banking problems would push its borrowing costs to unsustainable levels and after China signalled it is not planning a large stimulus package.
The benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange ended 2.1 percent lower at 3,111 Malaysian ringgit ($990) per tonne. Prices, which earlier hit a low at 3,106 ringgit, have slipped more than 10 percent this month. Traded volumes stood at 17,601 lots of 25 tonnes each, compared with Tuesday's total at 15,689 lots. Palm oil is "taking its cue from macro uncertainties," said a Kuala Lumpur-based trader. "If Europe fail to provide the much needed simulation, it will have more downside."
Last week, palm prices were weighed down as no significant breakthrough was made in resolving Europe's debt crisis, sending the benchmark down to its lowest level this year at 2,993 ringgit per tonne. Palm oil will drop to 3,069 ringgit per tonne, driven by a wave (5), the fifth wave of a five-wave cycle, said Reuters market analyst Wang Tao based on technical analysis. "The market fundamentals are still bullish because of slower production and exports not being too bad, but outside factors really scared buyers," said a Jakarta-based buyer.
But highlighting how jittery investors are, benchmark palm prices rose to their highest peak in almost two weeks earlier this week as investors keep a close eye on weather conditions in the United States. "Palm oil today is down a bit," a second Kuala Lumpur-based trader said. "With the euro zone crisis dragging ... everything is uncertain." "So far so good," he added on the US weather patterns. "But it's only the initial part of the planting season." Also helping to boost palm prices, according to traders, was a rise in demand from India and Pakistan for Ramazan, where fasting in the day is followed by feasting in the evening.