Palm oil eases after Greece rejects bailout terms

Malaysian palm oil lost ground on Monday, falling 1.5 percent as stocks and commodities slid after Greece rejected terms of a bailout package, raising risk of a global financial crisis. Shares fell in Europe and Asia, the euro stumbled and yields on weaker euro zone economies' bonds rose after Greece overwhelmingly voted against conditions for a rescue package, but there was no rout and contagion was limited.
The European Central Bank is likely to maintain emergency funding for Greek banks at its current restricted level, people familiar with the matter said on Sunday, a move that will see lenders run out of cash soon. "I think the move in palm oil is directly linked to the Greek crisis as it is having an overwhelming influence across markets in Asia," said one Kuala Lumpur-based palm oil trader.
The September palm oil contract on the Bursa Malaysia Derivatives exchange finished down 1.5 percent, or 35 ringgit, at 2,235 ringgit ($588) a tonne. Total traded volume stood at 36,835 lots of 25 tonnes each, slightly above the usual 35,000 lots. Palm oil climbed to 2,285 ringgit on Friday, highest since June 25.
The market is awaiting data on palm oil production, exports and stocks due to be released by the Malaysian Palm Oil Board later this week. "Production might be bit lower because of the fasting month," the trader said. Palm oil is expected to drop to 2,216 ringgit, as it has broken a support at 2,250 ringgit, according to Wang Tao, Reuters market analyst for commodities and energy technicals.
The support was provided by the 38.2 percent Fibonacci retracement on the uptrend from the April 29 low of 2,070 ringgit to the June 8 high of 2,362 ringgit. The next support will be at 2,216 ringgit, the 50 percent level. In other vegetable oils, the US soyoil slid 1.6 percent, while the most-active soybean oil contract on the Dalian Commodity Exchange fell 1.8 percent. Last week, Informa Economics lowered its forecasts of the US 2015 soybean production after incorporating updated acreage estimates released by the US Department of Agriculture.
For soybeans, Informa forecast production at 3.808 billion bushels, down from 3.871 billion previously. The firm raised its soybean yield estimate to 45.1 bushels per acre, from 45.0 in June, but the production figure fell because Informa used the USDA's harvested area figure of 84.449 million acres, compared with its own previous estimate of 86.044 million.