Malaysian palm oil futures edged down to their lowest in a week on Tuesday as investors chose to avoid risky bets ahead of industry reports on export demand at the world's second-largest producer. Prices were also consolidating from big gains last week, after a typhoon in the Philippines threatened an edible oil shortage in the region.
"Trade is quiet. Investors are waiting for new leads that will make the market move," said a trader with a foreign commodities brokerage. Market players are waiting for more information on export demand from cargo surveyor reports, due on Wednesday, that will show shipments of Malaysian palm oil in the November 1-20 period. By Tuesday's close, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had lost 1.4 percent to 2,556 ringgit ($806) per tonne. Prices earlier dropped to 2,552 ringgit, the lowest since November 12, and were locked between 2,552 ringgit and 2,586 ringgit.
Total traded volume stood at 30,782 lots of 25 tonnes each, below the average 35,000 lots as some investors chose to stay on the sidelines. Technicals showed that Malaysian palm oil is expected to fall to its November 8 low of 2,506 ringgit per tonne, as indicated by its wave pattern and a double-top, said Reuters market analyst Wang Tao. The monsoon season, which has just begun, causes heavy rains and floods that complicate harvesting and cuts down on output in the world's top producers Malaysia and Indonesia.
Some investors are optimistic that China, the world's second-largest palm oil buyer, will still import palm as buyers re-stock ahead of the Lunar New Year festival celebrated in January. Other investors, however, said traders could have booked shipments much earlier. In competing vegetable oil markets, the US soyoil contract for December was flat in late Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.6 percent.
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