Malaysian palm oil lower

Malaysian palm futures fell as much as 0.8 percent on Thursday to hit a fresh two-month low as top Asian buyers slow purchases, although losses mere muted on concerns of an El Nino weather episode developing. "Some players, especially from the Indian subcontinent, are waiting for the market to fall to 2,300 ringgit before they come in a big way. So they can delay the big purchases," said a trader with a local commodities brokerage.
The benchmark September contract on Bursa Malaysia's Derivatives Exchange fell as much as 19 ringgit to 2,356 ringgit ($668.5) by midday. Overall volume stood at 6,071 lots of 25 tonnes each. Open interest has fallen to about 75,000 lots this week from about 81,000 lots the week before as investors liquidated long positions on fears that the recent global commodity rally was overdone, traders said. Traders fear that the US dollar, despite hovering near lows struck the previous day, would strengthen against world currencies and sap demand for refined palm oil products which are usually priced in the world's most traded currency.
Malaysian exports of refined palm olein, used in cooking oil in China and India, weakened, with cargo surveyor Societe Generale de Surveillance reporting a 9.8 percent decline to 272,276 tonnes in June 1-15 from the same period a month earlier. El Nino brings hotter weather and less rain to top producers Malaysia and Indonesia and can aggravate ongoing biological tree stress and lead to lower palm oil yields 12 months later. But investment bank Credit Suisse said the current low yield period could end in June given that it only lasts for 6-9 months, although top planters like IOI Corp and Asiatic have not shown an improvement in production.
"We believe this could be attributed to the location (of these companies') plantations in Sabah and Johor (states) (which) were particularly adversely affected in early 2009 due to excessive rainfall," Credit Suisse said in a note to clients. Palm oil output growth in Malaysia will stay weak for the next two years because an aggressive replanting scheme and hot weather will aggravate yield stress in oil palms, an industry regulator said on Tuesday.
Oil rose above $71 a barrel but vegetable oil markets bucked the trend. US soyoil futures were firm and The most-active January 2010 soyoil on China's Dalian Commodity Exchange fell. In the Malaysian physical market, no trades were done for June delivery in the southern region as sellers were hoping the market would recover, one dealer said.