Malaysian palm oil dropped for a fifth consecutive session on Thursday to its lowest in seven months with rising supplies and sluggish demand putting pressure on the market. Palm oil, which is on track for a third straight month of decline, could find a floor on the back of rising US soybean oil prices. The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell 1.7 percent to 2,460 ringgit ($766) per tonne by the Thursday's close. The contract hit an intraday low of 2,459 ringgit a tonne, the lowest since October 29.
Total traded volume stood at 32,914 lots of 25 tonnes, just below the usual 35,000 lots. "There are concerns as demand is still weak while seasonally the supply is improving," said a Melbourne-based analyst. On the technical front, palm oil is expected to find a support at 2,472 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection level, according to Reuters market analyst Wang Tao.
Sime Darby Bhd, the world's top oil palm planter by landbank size, sees average palm oil prices at 2,500 ringgit ($780) a tonne this year, a company official said on Thursday, but added that prices could go as high as 2,700 ringgit per tonne if the El Nino weather phenomenon returns to curb yields. "Demand in China and India has slowed down. The bumper soybean crop is also going to hamper prices. Prices will likely be around 2,500 ringgit," said Philip Kunjappy, an official with Sime Darby's group corporate services.
"With El Nino, at the most they can rise by 200 ringgit," he added. In other competing vegetable oil markets, the US soyoil for July delivery rose 0.4 percent in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange added 0.2 percent.
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