Malaysian crude palm oil fell to its lowest in more than five weeks on Thursday, as investors turned more bearish on forecasts for rain in parts of the US Midwest that could bring some relief to the drought-hit soy crop. A larger supply of soybeans to be crushed into vegetable oil could narrow spreads between soybean oil and palm oil and draw demand away from the tropical oil.
Market players also priced in weaker Malaysian exports for the July 1-25 period after cargo surveyors reported declines from a month ago, reinforcing views that stock levels could climb after falling to a 14-month low in June. "There is not enough push to go up after some profit bookings yesterday, so the market is down again today," said a Singapore-based trader with a foreign commodities brokerage. "It looks like the trend is still bearish." Benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange fell 2.3 percent to close at 2,882 ringgit ($909) per tonne. Prices earlier touched 2,880 ringgit, the lowest level since June 18.
Traded volume picked up after the midday break to 27,567 lots of 25 tonnes each, higher than the usual 25,000 lots. Technicals were bearish, as palm oil is biased to fall to 2,838 ringgit, Reuters market analyst Wang Tao said, based on a wave pattern and retracement analysis.
Malaysia's palm oil exports continued to show weakness from a month ago, falling 14.3 percent and 18.6 percent, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively. Other vegetable oil markets similarly suffered declines on US wet weather forecasts. By 1001 GMT, the most active US soyoil contract for December delivery was down 1.3 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange was almost flat.
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