Malaysian palm oil futures closed lower for a second straight day on Friday as worries over weak exports and a retreat in rival soybean and crude oil prices prompted long liquidation, traders said. The benchmark August contract on the Bursa Malaysia's Derivatives Exchange settled down 20 ringgit, or 0.8 percent, to 2,465 ringgit ($712.04) per tonne. Overall volume was 16,137 lots of 25 tonnes each.
US crude fell $1.05 to $71.63 a barrel by 1059 GMT, after reaching a 2009 intra-day high of $73.23 on Thursday. Most active CBOT soyoil was down 0.3 percent in Asian hours. Fears mount that stocks may continue to rise this month after cargo surveyors said exports for the first 10 days of June dropped up to 35 percent from the same period in May, while production is entering a high season.
Traders, however, said what has helped limit the downside is concerns over the prospect of the El Nino weather pattern and tight soybean supply after the US Department of Agriculture data released mid-week showing soybean supply to fall to its lowest level in more than three decades this year.
In a research note to clients, J.P. Morgan said on Friday that it believed CPO prices could hold near current levels and were unlikely to fall to 2,000 ringgit as tight soybean inventory would help compensate for a pickup in CPO output.
El Nino occurs when the eastern Pacific Ocean heats up, with warmer, moist air moving east, leaving drier weather in the western Pacific and Australia and putting crops at risk of failure. The most devastating El Nino was in 1997/98, when it caused drought in Australia and Indonesia and floods in Peru and Ecuador. El Nino can also bring wetter weather to parts of the United States and can affect the monsoon in India.
INDONESIA PALM TRADES: In Indonesia, the world's top producer of palm oil, the Jakarta-based state marketing centre did not sell any of 8,500 tonnes of palm oil it offered in auction due to low bids. In another tender in Jakarta, PT Astra Agro Lestari sold 5,500 tonnes of palm oil at top price of 7,610 rupiah per kg, against 7,635 rupiah on Thursday.
Producers in Medan, home to Indonesia's main palm oil export port Belawan, sold palm oil at 7,535 rupiah per kg, against 7,641-7,649 rupiah per kg a day before. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 7,650 rupiah per kg, unchanged from Thursday.
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