Malaysian crude palm oil futures slid as much as 7.2 percent on Tuesday as weaker crude oil revived fears of a global recession, which would sap demand and swell already burgeoning stocks. Prices of the tropical oil have slumped more than two-thirds from a March peak of 4,486 ringgit as big buyers China and India slow purchases in a year-long high production cycle.
The benchmark January contract fell 120 ringgit to a inter-day low of 1,546 ringgit ($438) per tonne, tumbling off a near two-week high hit the previous day. By the end of session, the contract traded down 88 ringgit. Stocks of crude palm oil in Indonesia, the world's largest producer of the commodity, could swell 67 percent this year, boosted by higher output and defaults by foreign buyers, an industry official said on Tuesday.
Other traded months on Bursa Malaysia fell between 79 and 88 ringgit. Overall volume stood at 12,390 lots at 25 tonnes each. Oil fell more than $1 on Tuesday, extending the previous session's losses as signs of slowing demand outweighed the impact of Opec's oil production cut.
US soyoil for December delivery inched lower in late Asian trade but the most-active January 2009 soyoil contract on the Dalian Commodity Exchange edged up. Prices of most of these vegetable oils move in tandem with crude oil due to their growing use in biofuels, but traders say demand from that sector is likely to slow, along with overall transport fuel demand as the global economy slows.
Prospects for palm biodiesel this year remain muted as the European winter makes the fuel freeze, Aseambankers said in a research note, but noted that recent government mandates for use of the fuel in the domestic market might support prices. Indonesia issued in September a mandatory biofuel decree for the following year.
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