Malaysian palm oil futures retreated on Friday on expectations of higher supply and an uncertain global economic outlook. Traders largely ignored strong export data, focusing instead on the debt crises in the eurozone and the United States that may slow global economic growth.
Intertek Testing Services reported Malaysian palm oil exports rose 12 percent for July 1-15 compared to a month ago. Another cargo surveyor said exports during the same period rose 4.6 percent. "Talks of slower demand (in the future) and higher production have triggered profit-taking," said a trader in Kuala Lumpur. "The increase in exports would not have caused havoc to the palm oil market since we could have a high stocks level at the end of this month," he added. Malaysia's June palm oil stocks hit an 18-month high of 2.05 million tonnes, and traders predict the figure will rise more as planters push the harvest before Eid-ul-fitr in August.
The benchmark September crude palm oil contract on the Bursa Malaysia Derivatives exchange fell 0.9 percent to 3,116 ringgit ($1,038) a tonne. Overall traded volume was light at 22,251 lots of 25 tonnes each, compared to the usual 25,000 lots. The same contract hit a near three-week high the previous day on the back of a firmer grains complex and crude oil.
Palm oil prices along with other commodities in the previous session after Federal Reserve Chairman Ben Bernanke dashed hopes for another quick economic stimulus that could have boosted raw materials demand. "The market got a little deflated because there is news coming out of the US that there may not be further economic stimulus, so that has taken the wind out of most commodity markets," said a trader with a plantation house. Other vegetable oils were mixed. US soyoil for August delivery rose 0.3 percent on the back of firmer US grains complex with some help from hot weather in the country. The most active May 2012 soyoil on China's Dalian Commodity Exchange barely moved.
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