Palm oil tumbles

Malaysian palm oil futures hit fresh 3-month lows on Wednesday, reversing a brief respite in a sixth-straight day of declines during morning trading, as concerns over export demand outlook for the edible oil triggered prices to fall further. By Wednesday's close, benchmark palm oil for October on the Bursa Malaysia Derivatives Exchange had slipped 0.89 percent to 2,112 ringgit ($554.40) a tonne. Earlier, the contract hit 2,108 ringgit, its lowest since April 30.
"This is a continuation of the prevailing market weaknes," said a trader with a foreign commodities brokerage in Kuala Lumpur. "After the lunch break when the Dalian RBD palm oil didn't move much, we took the opportunity to adjust prices and continue with the bearish movement," the trader said referring to palm oil traded on China's Dalian Commodity Exchange. Total traded volume on Wednesday stood at 56,574 lots of 25 tonnes each, well above the roughly 35,000 lots usually traded daily.
Recent political drama involving allegations of graft embroiling Malaysian Prime Minister Najib Razak was not seen affecting the market, the trader said. However, turmoil in Chinese stock markets would impact demand for palm oil, a second trader said, referring to one of the world's top importers of the edible oil. "There are people who are also involved in the palm oil trade whose money is being eroded there," the trader said.
With declining exports from Malaysia in July expected to outweigh declines in production over the Muslim holiday period, Malaysian Palm Oil Board closing stocks and production data due out on August 10 could show excess stocks, the trader said. "The market is depressed here trying to get a foothold for new demand." In competing markets, oil prices fell in Asian trade on Wednesday as concerns over global oversupply outweighed the impact of a likely larger than expected draw in US crude stocks and a weakening dollar.
The US soyoil contract for August slipped 0.91 percent in afternoon Asian trading. Meanwhile, the most active January soybean oil contract on the Dalian Commodity Exchange edged up 0.77 percent snapping a four-day selloff, and Dalian RBD palm oil for September delivery gained 0.89 percent.