Malaysian palm oil futures fell for a third straight session on Tuesday as end-stocks remained high and bullish price factors were limited. The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange lost 0.3 percent to 2,294 ringgit ($522.43) a tonne at the end of the day. Despite an earlier recovery in the Chicago and Dalian markets, palm prices fell and trading activity remained slow, said a trader based in Kuala Lumpur.
"Generally people are still not bullish as the already high stocks are expected to increase further," he said. "The scenario doesn't look bullish at all. The El Nino is already discounted in and demand is still slow." Inventories in the world's no.2 producer rose to a near 15-year high at the end of October due to an unexpected rise in production.
Traders forecast end-stocks to rise more in November. The dry weather brought about by El Nino is expected to reduces palm yields and lower output across Indonesia, the world's largest palm producer. This could lend support to palm prices. Traded volume stood at 45,132 lots of 25 tonnes each, above the average 35,000 lots usually traded in a day.
Palm oil is expected to retest support at 2,291 ringgit per tonne, with a good chance of breaking below this level and falling more to the next support at 2,233 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. In competing vegetable oil markets, the US December soyoil contract and the January soybean oil contract on the Dalian Commodity Exchange gained 0.4 and 0.7 percent respectively.
Comments
Comments are closed.