Malaysian crude palm oil ended flat after touching its lowest in the week on Thursday as wet weather forecast in the US Midwest brought relief to drought-hit soy crop, easing some concerns of tighter oilseed supplies. The benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange ended one ringgit higher at 2,946 ringgit ($944) per tonne, supported by last-minute buying.
Prices earlier touched a low at 2,905 ringgit, a level last seen on July 27. Traded volumes stood at 23,869 lots of 25 tonnes each, slightly lower than the usual 25,000 lots. A better chance of rain was expected late this week in portions of the drought-stricken US Midwest, bringing some relief to the struggling soybean crops, an agricultural meteorologist said on Wednesday.
Market players have been pricing in the damage done by the relentless drought on soybean crops in the United States that squeezed soybean oil supply. A drop in soybean oil supply could shift more vegetable oil demand to the cheaper palm oil. Traders are looking out for July stock figures in No.2 producer Malaysia, which could climb on slowing exports and better production.
Malaysian palm oil exports fell by 15 percent and 19 percent in July from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively. While the US crop scares appear to be receding, traders are eyeing El Nino's dry weather pattern which could return to Southeast Asia by end of this year and hurt production for top exporters Indonesia and Malaysia. In other vegetable oil markets, the most active US soyoil contract for December delivery had gained 0.7 percent by 1011 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 0.8 percent lower.
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