Malaysian palm oil futures fell to the lowest so far this year on Monday, as investors rushed for the exits on growing global economic fears that also triggered a broader sell-off in other commodities markets. Palm oil closed below the key 3,000-ringgit mark for the first time since December 2011, with investors bearish due to weak economic data and as the eurozone debt crisis rumbles on.
"Sentiment is bad across all risky assets, for example crude oil. On the demand side, however, palm oil is still positive," said Alan Lim, research analyst with Kenanga Investment Bank in Malaysia. "Palm oil is more on the defensive side because it's used mainly for food, so demand should be sustainable. Investors will be looking closely at the Greece election on June 17, so the market will still be volatile for this week and next week."
The benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange slumped 1.6 percent to close at 2,958 ringgit ($923) per tonne after going as low as 2,925 ringgit, the lowest since November 2, 2011. Traded volumes stood at 42,377 lots of 25 tonnes each, much higher than the usual 25,000 lots as investors liquidated positions.
On the technicals front, Reuters market analyst Wang Tao remained bearish, saying palm oil will fall to 2,830 ringgit per tonne as indicated by its wave pattern and a Fibonacci projection analysis. Demand for the edible oil remained flat to firm in May, according to export numbers reported by cargo surveyors.
The bulk of the orders came from Pakistan and the Middle East where Muslims are getting ready to observe a month of fasting starting in mid July, when fasting in the day is followed by feasting in the evening. But despite healthy physical demand, a sluggish performance in other global commodity markets weighed on futures prices. In other vegetable oil markets, US soyoil for July delivery lost 1 percent in late Asian trade and the most active January 2013 soyoil contract on the Dalian commodity exchange lost 2.3 percent.
Comments
Comments are closed.