Malaysian palm oil falls

Malaysian crude palm oil futures fell as much as 1.4 percent on Wednesday to hit a near two-week low on higher stocks and crude oil easing from its earlier rally. Palm oil prices extended losses for a third day on market talk that palm oil inventories may jump more than 15 percent this month from 1.5 million tonnes in Malaysia as yields seasonally peak.
Crude oil went below $79 a barrel, sapping sentiment in vegetable oil markets, thanks to weaker stock markets and a stronger US dollar. The benchmark January palm oil contract on the Bursa Malaysia Derivatives Exchange fell as much as 30 ringgit to 2,140 ringgit ($627) per tonne, a level unseen since October 16.
The market then settled 18 ringgit lower at 2,152 ringgit. "The selldown has gained a little more strength and weaker crude oil prices are adding to the domestic bearish picture of high production and higher stocks," a trader with a local commodities' broker said.
Palm oil prices have stayed below the 50-day moving average of 2,190 ringgit and traders say there could be more liquidation in the cards as volumes have more than doubled to 22,255 lots from the usual 10,000 lots. Cash palm oil may narrow its discount to rival soyoil by 25.1 percent in 2010 as bumper US and South American soybean crops boost global vegetable oil supply, a scenario that will see more consumers buy soyoil, a Reuters poll found.
Vegetable oil markets were weak as crude oil offset bad weather and fears of lower quality crops in China and the US The most-active May 2010 soyoil contract on China's Dalian Commodity Exchange ended 0.4 percent lower. US soyoil for December delivery slipped but losses were limited by concerns that the rains were forcing farmers to harvest soybeans with undesirably high moisture content.
INDONESIA PALM TRADES In Indonesia, the state marketing centre, based in Jakarta, sold 4,000 tonnes of palm oil at a top price of 6,609 rupiah ($0.688) per kg, against 6,629 rupiah per kg on Tuesday. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold any palm oil tenders on Wednesday. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 6,400 rupiah per kg against 6,500-6,550 rupiah per kg a day earlier.