Palm oil slides

Malaysian palm oil futures slid to touch a near five-year low on Thursday, following losses in overseas soy markets, and further dragged by forecasts of abundant supply of competing oilseeds alongside an expected surge in Southeast Asian palm output. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,115 ringgit in late trade, its lowest since October 15, 2013, before settling 2.0 percent down at 2,133 ringgit ($674) per tonne by Thursday's close.
"It's because of the weak soybean oil prices and the slightly stronger ringgit. There's also the ongoing bearish sentiment after the MPOB and USDA data," said a trader with a local commodities brokerage in Kuala Lumpur. "Next, the nearest low to be tested is 2,013 ringgit touched in October 2009 and also the July 2009 low of 1,964 ringgit - the next fall may target these two levels." The US soyoil contract for December fell 1.9 percent in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange slid as much as 3.7 percent to hit a contract low of 6,096 yuan.
Total traded volume on Thursday stood at 51,426 lots of 25 tonnes, much higher than the usual 35,000 lots. Technicals were also bearish. Malaysian palm oil is expected to fall more into a range of 2,094-2,124 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection analysis, said Reuters market analyst Wang Tao.
Palm prices, which are heading for their biggest weekly drop since early January, are struggling with projections of a speedy recovery in production in top growers Indonesia and Malaysia. Industry regulator the Malaysian Palm Oil Board (MPOB) on Monday showed Malaysian palm oil end-stocks rose to 1.68 million tonnes in July, against trade estimates that inventories would shrink, due to a stronger-than-expected rise in output.
Export data on shipment volumes in the first half of August will be released on Friday. "Definitely the first 15 days exports is going to be lower than last month," the Kuala Lumpur trader added. "Even if there is an improvement compared to the first 10 days, it's not going to help the market much. The talk about higher supply is still there."