Malaysian crude palm oil futures fell to a 3-week low on Thursday, as traders booked profits after US soybeans dropped from a record high and a leading industry analyst warned of a looming supply glut of the tropical oil. Soybeans touched a 1-week low in Asian trading hours as traders locked in profits with expectations of supply coming in with the Midwest harvest kicking off, a sentiment that spread to palm oil futures.
The market turned more bearish after Dorab Mistry, head of vegetable oil trading with Indian conglomerate Godrej Industries, said record south-east Asian palm oil stocks may weigh on prices that have fallen more than 7 percent this year. "The Dalian and Chicago Board of Trade this morning is already under pressure. Definitely, palm is following up with the external pressure," said a trader with foreign commodities brokerage in Malaysia.
The benchmark November contract on the Bursa Malaysia Derivatives Exchange tumbled as much as 2.6 percent to 2,913 ringgit ($935) per tonne, its lowest level since August 16, before closing at 2,948 ringgit. Total traded volume stood at 45,071 lots of 25 tonnes each, much higher than the usual 25,000 lots. Technicals were also bearish. Malaysian palm oil is expected to drop further to 2,901 ringgit, as it has broken below a support at 2,956 ringgit per tonne, according to Reuters analyst Wang Tao.
In the palm oil physical market, sellers are now holding back after the futures prices fell sharply, although buyers are keen to strike deals at lower levels, traders said. Edible oil prices were still under pressure from profit-taking. By 1008 GMT, US soyoil for December delivery fell 0.7 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange closed 1.3 percent lower.
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