Malaysian palm oil futures inched down on Wednesday to a near six-week low, stretching losses into a sixth straight session with investors remaining cautious that uncertain overseas markets could weigh on demand for the tropical oil. Prices had crept up 0.7 percent by the midday break as traders retraced from liquidations earlier in the week, but dropped later to as low as 2,395 ringgit per tonne.
"There was some retracement in the market earlier but it could not sustain itself because there was no fresh news at those levels, so prices have come under more selling pressure," said a trader with a local commodities brokerage in Malaysia. The benchmark May contract on the Bursa Malaysia Derivatives Exchange fell 0.4 percent to 2,410 ringgit ($777) per tonne by the day's close. Prices traded in a tight range between 2,395 and 2,443 ringgit. Total traded volume stood at 34,090 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technicals showed Malaysian palm oil is expected to hover above a support at 2,405 ringgit per tonne for one trading session before breaking this level and falling further towards 2,361 ringgit, said Reuters market analyst Wang Tao. Palm oil production in Malaysia, the world's No 2 producer, has slowed from its seasonal peak in September. At the same time stronger-then-expected exports of Malaysian palm oil products - the cheapest in the world - are widely expected to help ease inventory levels that are still high.
"With a rising export trend and falling production rate, we see a good chance the stockpile levels in February could come down," said Phillip Futures analyst Ker Chung Yang in Singapore. He expects end-stocks in February to fall to 2.2 million tonnes from 2.58 million now. In competing vegetable oil markets, US soyaoil for May delivery rose 0.1 percent in early Asian trade. The most-active September soybean oil contract on the Dalian Commodity Exchange inched down 0.9 percent.
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