Malaysian crude palm oil futures fell to a three-week low on Tuesday on technical selling and a slowdown in demand thanks to a surge in cash prices. Palm oil has lost 5.7 percent so far this year thanks to expectations of bountiful supply of US soybeans although losses were limited by oilseeds output in Europe due to drought and rainy weather in oil palm growing Southeast Asia.
Traders say demand has been lacklustre due to a slowdown in orders from China and Pakistan. Refiners have been cautious as the recent strength in the Malaysian ringgit may hit their margins from processing and exporting palm oil. "Looking at the current scenario, the physical market is a bit quiet. Destination interest is mute for the time being," said a trader in Kuala Lumpur.
The benchmark November crude palm oil contract on the Bursa Malaysia Derivatives Exchange fell almost 2 percent, or 50 ringgit, to 2,510 ringgit ($801.9) a tonne after touching its lowest since July 30 at 2,502 ringgit.
Traded volume nearly tripled to 28,938 lots of 25 tonnes each. A Reuters technical analysis showed the November palm oil contract may rebound towards 2,610 ringgit per tonne. Some traders said rainy weather in Indonesia and Malaysia may boost production in the short term. Slower overseas demand may lead to an eventual stock build-up. Traders are also on the lookout for the exports data for August 1-25 that will be released on Wednesday.
INDONESIA PALM TRADES: In Indonesia, Jakarta-based PT KBN Nusantara, formerly known as the state marketing centre, sold 1,000 tonnes of crude palm oil in an auction on Tuesday with top price at 8,035 rupiah ($0.896) per kg, against 8,033 rupiah a kg on Monday. Producers in Medan, home to Indonesia's main palm oil export port of Belawan in Sumatra island, crude palm oil was sold at 7,983-7,995 rupiah per kg in an auction on Tuesday.
Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm olein - used as cooking oil - at 8,350 rupiah per kg on Monday against 8,300 rupiah per kg on Monday. PT Astra Agro Lestari offered 500 tonnes of super palm kernel oil (PKO) in an auction on Tuesday at $1,180 per tonne. Buyers bid at $1,108-$1,122 per tonne for the super PKO ex-factory Sari Aditya Loka 1 in Teluk Bayur, Jambi.
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