Palm oil plunges

Malaysian palm oil dropped to a fresh four-month low on Monday, as volatility in commodities markets overall and losses in soybeans weighed, with investors also wary ahead of slowing export demand. Global markets have faced turbulent trading over the past week as economic data from the United States and China sparked concerns that slowing growth could hurt demand for commodities, triggering a sell-off in crude oil and gold markets.
Palm, the most widely traded vegetable oil in the world, also faced pressure from sluggish export data which slipped about 5-6 percent in April 1-20 compared to a month ago, cargo surveyors. "There's nothing wrong for market to be down today - it was expected generally because of the soybean and crude oil prices, which indirectly affects Malaysian palm oil," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"The market is quiet and uncertain at this level. A lot of buyers are staying on the sidelines for now. The local sentiment is okay, but not the global sentiment," he added.
Falling prices of soyoil, a close competitor of palm, could wean away demand from the latter. The benchmark July contract on the Bursa Malaysia Derivatives Exchange settled down 1.7 percent at 2,256 ringgit ($740) per tonne after going as low as 2,250 ringgit - a level not seen since December 14.
Total traded volumes were thin at 17,147 lots of 25 tonnes each, compared to the usual 25,000 lots. Technical analysis showed palm oil is expected to test a support of 2,249 ringgit per tonne, a break below which will lead to a further drop to 2,184 ringgit, Reuters market analyst Wang Tao said.
Sluggish exports in the remaining days of April could prevent end-stocks from easing, traders say, and further hurt prices, which have lost 7.4 percent so far this year. Palm oil stocks in Malaysia, the world's No 2 producer, stood at 2.17 million tonnes as of end-March after declining 11 percent from end-February's 2.44 million tonnes. In other vegetable oil markets, US soyaoil for July delivery dropped nearly 1 percent in Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange tumbled nearly 3 percent.