Palm oil falls

Malaysian palm oil futures fell on Wednesday as eurozone caution and thin trading volumes overshadowed prospects of lower production aggravated by erratic weather. Investor caution grew over the chance for more progress in resolving lingering eurozone debt woes after officials agreed to boost a rescue fund and seek more aid from the International Monetary Fund.
Traders are also expecting a slow week as industry players attend the Indonesia Palm Oil Conference and Price Outlook 2012, which starts on Wednesday. "The market is simply tracking external markets such as the CBOT. It has been the third day that it is trying to break below the 3,050-ringgit level," a dealer in Kuala Lumpur said before the midday break.
Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange closed down 1.4 percent at 3,018 Malaysian ringgit ($960) per tonne. Prices dropped as low as 3,011 ringgit, a level last seen on November 10. Overall traded volumes stood at 18,350 lots of 25 tonnes each, thinner than the usual 25,000 lots.
Industry analysts, including Dorab Mistry and James Fry, will present their views at the conference on Friday. Heavy monsoon rains and a seasonal decline in yields are expected to lower Malaysia's November palm oil production, which some traders said may fall by 15 to 18 percent.
The Malaysia Meteorological Department issued a yellow stage warning that heavy rain may persist till Saturday and cause floods over low-lying parts of Pahang - a key oil palm growing area that accounts for 15 percent of production in Malaysia. Cargo surveyor Intertek Testing Services said Malaysian palm oil exports for November fell 8.8 percent to 1.53 million tonnes, in line with industry sources' expectations. Concerns over the eurozone bailout progress also dragged down other vegetable oil markets. US soyoil for December delivery slipped 1.3 percent while China's most active May 2012 soybean oil contract lost 0.9 percent.