Malaysian palm, soya oils slide

Vegetable oil futures slid on Monday with palm oil nearing a one year low as investors exited commodity markets on concerns governments from the United States to Europe had done too little to avoid a global recession. Benchmark palm oil futures dropped as much as 4.5 percent, its worst daily showing since February this year before clawing back some losses.
US soyaoil for October delivery lost nearly 3 percent in Asian trade. China's most active May 2012 soyabean oil contract lost as much as 4.9 percent - its worst daily fall since October 2008 at the height of the financial crisis then. Sentiment has been knocked down by a week of grim economic news that included a downgrade of Italian debt, the third month of contracting Chinese factory data and indices pointing to slow-growing business in Europe.
"Palm oil is not immune," said a Singapore-based analyst on the economic jitters that are gripping financial markets. "We're seeing risk-aversion from markets that have been out-performing and those are the ones people sell first." Further compounding the declines, industry analysts and traders painted a bleak outlook for palm oil and other vegetable oils at the weekend Globoil conference in the Indian financial capital of Mumbai.
But some analysts pointed to a brewing La Nina weather pattern at the end of the year affecting production in 2012 and possibly restarting a rally in palm oil that has lost more than a fifth of its value so far in 2011.
Demand from developing nations such as India and China could help limit the losses in vegetable oil markets, traders said, as reflected in the latest Malaysian palm oil export numbers. Exports of Malaysian palm oil for September 1-25 fell 11.9 percent from the same period a month ago, cargo surveyor Intertek Testing Services said on Monday, flagging a recovery from the first ten days of this month when the decline stood at 36.4 percent. Another cargo surveyor, Societe Generale de Surveillance, said Malaysian exports for September 1-25 fell 11.8 percent.
"India and China are still buying cargoes for their festivals and public holidays in October and this free-fall in prices could see some bargain hunting," said a trader in Malaysia. If the palm oil market continues to fall, Chinese firms may want to renegotiate the contracted prices of the cargoes, traders said.