KUALA LUMPUR: Malaysian palm oil futures fell on Thursday, giving up gains in early trade to fall nine out of 10 sessions as worries about dwindling demand and losses in overseas soy markets weighed.
The benchmark August contract on the Bursa Malaysia Derivatives Exchange had touched a near one-week high of 2,449 ringgit before settling lower at 2,419 ringgit ($749) per tonne by the midday break, down 0.5 percent.
Market players say the slower export growth in the second half of May has fuelled concerns that demand for the tropical oil will continue to slacken in June, adding pressure on prices which have lost nearly 10 percent this year.
"In the last five days of May we already started seeing poor exports. So, we are expecting nothing great in the first 10 days of June," said a trader with a local commodities brokerage in Kuala Lumpur.
Total traded volume stood at 10,975 lots of 25 tonnes on Thursday, below the usual 12,500 lots as some investors stayed on the sidelines and avoided risky bets for now.
"People are waiting for next week's MPOB data and the export data to decide," the trader added.
Export data on shipments of Malaysian palm products between June 1 and 10 will be released by cargo surveyors next Tuesday, alongside industry data on Malaysia's end-May palm stocks, output and exports.
Cargo surveyor data earlier this week showed that Malaysian palm exports were 8-9 percent higher in May from a month ago. The rise, however, was slower compared to a 23 percent jump recorded for the May 1-15 period as export demand fizzled out in the second half of the month.
Technicals were bearish. Palm oil may retrace to 2,395 ringgit per tonne, as it failed to break a resistance at 2,446 ringgit, said Reuters market analyst Wang Tao.
In competing vegetable oil markets, the US soyoil contract for July fell 0.3 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange rose 0.7 percent.
Palm typically tracks soybean oil, a common substitute. Weaker soybean oil prices narrow palm oil's discount, and could potentially channel food and fuel demand away.
The Malaysian ringgit strengthened on Thursday, eroding margins for overseas investors and refiners looking to buy the ringgit-priced palm feedstock.
The ringgit was up 0.22 percent at 3.2315 per dollar in early trade, gaining alongside most emerging Asian currencies on expectations that the European Central Bank will ease monetary policy later in the day.
In other markets, Brent crude slipped to a three-week low at $108 a barrel as tensions over Ukraine cooled, while ample supply in top oil consumer United States also dragged down prices.
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