Malaysian palm oil sinks four percent

Malaysian crude palm oil futures plunged 4 percent on Monday, to touch a two-week low, dragged down by declining prices of rival soyabean oil and crude oil. Traders said losses deepened as a top Singapore edible oil-trading firm sold heavily.
The benchmark October contract on the Bursar Malaysia Derivatives Exchange fell 102 ringgit, or 4 percent, to 2,480 ringgit ($716) per tonne, a level not seen since July 24 this year. "Soyabean oil on the Chicago Board of Trade has been moving lower, taking palm oil along," said one trader. "Crude oil is also going below $75 a barrel, making palm biofuels less feasible for the time being."
"There has also been some deliberate selling here by a large Singapore edible oil company," said another trader. "Other players in the market might follow suit because the fundamentals have not been very ideal lately." Worries that rising export demand might not keep up with the upswing in production for the coming months continued to pressure the market, traders said.
Other traded months fell between 43 and 88 ringgit. Overall trade slumped to 5,378 lots of 25 tonnes each from around 10,000 to 12,000 lots that change hands by on a routine day.
Palm oil, used in products ranging from confectioneries and cosmetics to biofuels, is more than 10 percent off an historic high of 2,764 ringgit reached in June.
Chicago Board of Trade soyabean futures fell 1.8 percent on Monday as wet weather over the weekend and forecasts for more rain in the US Midwest weighed on prices, traders said.
The August soyaoil contract fell 1.18 percent to 36.91 cents. Oil fell below $75 a barrel on Monday, extending the previous session's decline as concern about the United States economy rippled through financial and commodity markets. US crude fell $1.48 to $74.00. London Brent was down $1.27 cents at $73.48.
Crude oil market often influences vegetable oil prices, including palm and soyabean, because of their growing use in making bodiless, which directly competes with petroleum diesel. Asia's vegetable oil demand for the festival season has been dampened by surging prices and a seasonal upswing in production from Southeast Asia could result into swelling stockpiles.
Buying for the holy Muslim month of Ramazan has been subdued from South Asia and the Middle East while China has cut down imports as it focuses on soyabeans, traders said. October palm oil on Singapore's Joint Asian Derivatives Exchange was unthreaded.
In the physical market, crude palm oil for August shipment in Malaysia's southern and central regions was quoted at 2,625/2,635 ringgit a tonne. Deals were done at 2,630 and 2,635 ringgit.