Palm oil slips

Malaysian palm oil futures slipped on Tuesday on concerns of slower demand, although prospects of erratic weather hurting production limited losses. Traders shifted their focus from the eurozone debt crisis to prospects of weaker demand as refined palm oil products narrowed their discount to South American soyoil to $28 per tonne, the lowest in six months.
The tightening discount comes as favourable weather in South America raised prospects of a bumper soybean crop and La Nina-driven monsoon rains stirred concerns of weaker yields and a supply squeeze. "There is no real impetus for the market to move higher. There are concerns over the demand trend with palm oil drastically reducing its discount to Argentine soyoil," said a trader with a foreign commodities brokerage. Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange closed 0.2 percent lower at 3,062 ringgit ($958) per tonne. Prices fell as low as 3,054, just a whisker away from a two-week low hit on Friday. Overall traded volumes stood at 23,135 lots of 25 tonnes each, lower than the usual 25,000 lots as trading was thin after a long weekend holiday.
Traders are expecting a slow week as industry players attend the Indonesian Palm Oil Conference and Price Outlook 2012 on the island of Bali. Industry analysts, including Dorab Mistry and James Fry, present their views on Friday. "The market is waiting to see if these analysts will continue to keep a bullish outlook for the palm oil market," said another trader in Kuala Lumpur.
Some traders said Malaysia's November palm oil production might fall by 15-18 percent on heavy monsoon rains and a seasonal decline in yields. They forecast palm oil prices to surge above 3,200 ringgit. Industry sources expect Malaysia's November exports to be lower at 1.53 million tonnes, compared to the 1.65 and 1.68 million tonnes shipped out as reported by cargo surveyors in October. Cargo surveyor Intertek Testing Services and Societe Generale de Surveillance will issue November exports data on Wednesday.
US soyoil for December delivery slipped 0.2 percent in Asian trade as rainstorms over the weekend in Argentina's farming region boosted soil moisture, setting the stage for bumper soy crops. China's most active May 2012 soybean oil contract, however, edged up 0.3 per cent.