Malaysian crude palm oil futures slipped on Tuesday to their lowest in nearly a month, as traders turned cautious about high stocks and ahead of key reports by the US Department of Agriculture (USDA) due this week. The Malaysian Palm Oil Board (MPOB) reported August stocks at a 10-month high of 2.1 million tonnes, erasing some gains in palm oil futures that are trading 8 percent lower this year.
Traders also avoided taking risky positions ahead of the USDA's monthly supply-demand and crop production reports on Wednesday that could give insight into the extent of drought damage to soybean crops. "Today's selloff is purely technical," said a trader with a foreign commodities brokerage in Malaysia. "Basically we saw long liquidation coming in early in the morning. After the market broke below 2,900 ringgit, further selling came in."
The benchmark November contract on the Bursa Malaysia Derivatives Exchange slipped 0.6 percent to close at 2,919 ringgit ($945) per tonne. Prices had earlier fallen to 2,874 ringgit, the lowest level since Aug. 15. Total traded volume stood at 52,583 lots of 25 tonnes each, more than double the usual 25,000 lots.
Technicals will remain neutral until palm oil falls out of the range of 2,895 to 2,943 ringgit, said Reuters market analyst Wang Tao, adding that a drop below 2,895 ringgit would extend to 2,867 ringgit. Demand strengthened as Malaysia's palm oil exports rose as much as 30 percent for the Sept. 1-10 period from a month ago, cargo surveyor data showed on Monday.
"Though the latest data shows optimism on the export side on the back of higher tax-free crude palm oil quota, a growing concern is on the stockholding level, which has now spiralled to more than 2 million tonnes," Malaysia-based TA Securities said in a note to clients. In other vegetable oil markets, US soyoil for December delivery fell 0.2 percent by 1004 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.5 percent lower.
Comments
Comments are closed.