Malaysian crude palm oil futures were down on Wednesday on a range of concerns, including weak prices of rival soyoil, surging output of palm oil and a possible currency revaluation. The benchmark contract came precariously close - just two ringgit - to breaking the key psychological support of 1,400 ringgit a tonne.
"I wouldn't be surprised if we break that today," said a trader. "All we need is a fresh downward movement on Chicago Board of Trade."
Soyoil futures on the CBOT, or Chicago Board of Trade, were down in Wednesday's electronic trade, extending losses sparked by profit-taking the previous day.
Soy and palm compete for export destinations and their prices often move in step.
At midday on Wednesday, the benchmark third-month crude palm oil on Bursa Malaysia Derivatives, August, was down 7 ringgit, or half percent, at 1,405 ringgit ($372.37) a tonne.
Its low for the morning was 1,401 ringgit and high 1,408.
Other traded months settled down 5 to 6 ringgit.
Volume was 1,481 lots of 25 tonnes each - less than half of the 3,000 lots typically traded on a busy morning.
Dealers said investors were worried that palm oil production could surge in coming months, overtaking demand.
The market largely ignored estimates from a cargo surveyor on Tuesday that May shipments of palm oil could grow 18.6 percent over April.
Analysts from five plantation companies surveyed by Reuters last week forecast a median of 1,284,346 tonnes for May output, against the record 1,246,938 tonnes officially seen in April.
The state-run Malaysian Palm Oil Board will issue on June 10 official production, exports and closing stock numbers for May.
Constant speculation that Malaysia will revalue its ringgit - from the present fixed rate of 3.8 to the dollar - is also weighing on the market.
A higher ringgit will make palm oil, sold in dollars, more expensive.
Malaysia is the largest palm oil producer and can influence the international prices of the commodity.
In physical trade crude of palm oil, the June contract saw bids at 1,412.50 ringgit a tonne in Malaysia's southern region, against offers at 1,415.
In the central region, the same contract was bid/offered at 1,407.50/1,415 ringgit.
Trades were reported for June at 1,412.50 ringgit only in the south.
The July contract saw bids/offers at 1,412.50/1,420 in the south and 1,407.50/1,420 in the central region. No trades were reported.
Comments
Comments are closed.