Malaysian palm oil futures ended lower on Tuesday, giving up gains in the earlier session as traders fretted about poor appetite for the tropical oil, although tighter stocks in the world's No 2 grower curbed losses. Despite the weak ringgit, which has made palm oil cheaper for overseas buyers, shipments were sluggish, particularly to top edible oil consumers India and China, cargo surveyor data showed.
Intertek Testing Services reported that Malaysian palm exports fell 16 percent between February 1-10 from the same period in January. Another surveyor Societe Generale de Surveillance showed shipments dropped to 307,122 tonnes. "Exports for the first 10 days of February is not good," said a trader with a foreign commodities brokerage in Kuala Lumpur "Even with the weak ringgit, you've still got poor demand. So the market is going for a further correction."
The benchmark April contract had dropped 0.7 percent to 2,300 ringgit($643) per tonne by Tuesday's close, near the lower end of the day's trading range of 2,344-2,294 ringgit. Total traded volume stood at 52,742 lots of 25 tonnes, above the usual 35,000 lots. Official data from industry regulator the MPOB, released after the midday break, showed Malaysian inventories at their lowest in six months after flooding in Borneo helped to reduce overall output to their weakest since February 2011.
While the level of stocks was largely in line with market estimates, the drop in output was steeper, with January palm crude oil production at only 1.16 million tonnes versus a Reuters poll of 1.19 million tonnes. Technicals showed that palm oil may drop to 2,284 ringgit, as its correction triggered by a resistance at 2,355 ringgit seems to be incomplete, according to Reuters market analyst Wang Tao. In other competing vegetable oil markets, the US soyoil contract for March fell 0.8 percent in late Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange rose 0.2 percent.
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