Malaysian crude palm oil futures edged 0.4 percent lower on Thursday after an industry analyst said the recent rally was overdone and did not reflect rising stock levels. The benchmark February contract on the Bursa Malaysia Derivatives Exchange settled down 11 ringgit at 2,478 ringgit ($734.4) a tonne, after falling as low as 2,463 ringgit earlier in the session.
But gains in commodity markets, including crude oil and soyoil, helped to limit losses in palm oil, traders said. "The market hinges on stock levels now. We know that stocks will fall next year but what happens now is more important," said a trader with a foreign commodities brokerage.
Thomas Mielke, executive director of Hamburg-based OilWorld, said on Thursday current palm oil price levels were not sustainable as stocks in Indonesia and Malaysia had peaked at a combined 3.9 million tonnes last month.
Mielke was speaking at the Indonesian Palm Oil Conference and Price Outlook 2010 at the resort island of Bali, which started on Wednesday and also features analysts Dorab Mistry and James Fry. Traders have long expected a small drawdown in stocks in November as exports were still resilient and production growth was likely to be limited by heavy rains in key oil palm growing areas in Malaysia.
US crude futures edged higher on Thursday after dropping 2.3 percent a day earlier on a larger-than-expected build in US crude inventories. The gains gave some support to vegetable oil markets. US soyoil for January delivery rose 1.1 percent, while the most-active September soybean oil contract on China's Dalian Commodity exchange edged higher.
INDONESIAN PALM TRADES In Indonesia, the state marketing centre, based in Jakarta, did not sell any of the 8,000 tonnes of palm oil it offered in an auction due to low bids. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, sold palm oil at 7,081-7,140 rupiah per kg. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 6,900-6,950 rupiah per kg against 7,000 rupiah on Wednesday.
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