KUALA LUMPUR: Malaysian palm oil futures extended their slide into a second day on Tuesday, tracking losses in overseas soyoil markets and an earlier drop in oil prices, with a weak technical outlook piling pressure on the world's most traded vegetable oil.
Prices of palm on Monday reopened after the Lunar New Year break to weak US soyoil markets and sluggish export demand, which dragged the contract to its lowest level in 2-1/2 weeks.
"Technically, palm looks weak. External factors are not good - you've got weak closings for soyoil and crude," said a trader with a foreign commodities brokerage in Malaysia.
"After the sharp fall yesterday, a lot of people prefer to wait and see how low the market can go," the trader said, adding that immediate support stood at 2,200 Ringgit, with resistance at 2,270 Ringgit.
The benchmark May contract on the Bursa Malaysia Derivatives Exchange had edged down 0.8 percent to 2,221 Ringgit ($613) per tonne, with prices range bound at 2,216-2,233 Ringgit.
Traded volume stood at 13,928 tonnes, just above the usual 12,500 lots.
In competing vegetable oil markets, the US soyoil contract for May lost 0.8 percent in early Asian trade, pressured by worries over plentiful domestic stocks of the oilseed in the 2015-16 marketing year, which comes at a time when bumper soy harvests are anticipated from South America.
Meanwhile, global demand for palm has dwindled this month, raising concerns of a stock build as the pace of crude palm oil production picks up.
Data from cargo surveyors show that Malaysian palm oil exports between February 1-20, fell between 1-4 percent, with trade to China falling drastically during the Lunar New Year break as markets shut for the holiday.
Brent edged above $59 a barrel on Tuesday, after a 2-percent slide in the previous session, buoyed by cautious optimism on the outlook for the global economy. The benchmark is still 6-percent off a peak reached a week ago as worries about oversupply fester.
China's markets are still on a break for Lunar New Year and will reopen on February 25.
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