Malaysian palm oil futures fell for a seventh straight session on Monday to hit their lowest in nearly seven-and-a-half months, as weak soyoil prices and disappointing export data dragged on the tropical oil. The benchmark August contract on the Bursa Malaysia Derivatives Exchange fell to 2,386 ringgit in early trade, its weakest since October 18, 2013, before settling at 2,414 ringgit ($748) per tonne by the day's close, down 0.4 percent.
Total traded volume stood at 39,382 lots of 25 tonnes, above the usual 35,000 lots. Market participants said although demand for palm oil improved in May compared to April, the export growth slowed down towards the end of the month, signalling dwindling demand for the tropical oil despite a major festival just around the corner. "Fundamentally, palm itself is not so bearish. But there are people who feel that the export pace has not been too friendly," said a trader with a foreign commodities brokerage.
"We were expecting exports to maintain a very good pace until the end of the month. But the ITS number shows that it did not materialise," the Kuala Lumpur-based trader added. Cargo surveyor Intertek Testing Services (ITS) reported that a total of 1,315,952 tonnes of Malaysian palm oil products were shipped in May, 7.8 percent higher month-on-month, but slower than the 23 percent jump recorded in the May 1-15 period.
Consumption of palm oil, used as a cooking oil and as an ingredient in a wide range of food, typically climbs ahead of holy month of Ramazan and the Eidul-Fitr festival. Ramazan will commence from June-end this year. Technicals showed that palm oil is expected to drop to 2,341 ringgit per tonne, as it has cleared support at 2,422 ringgit, said Reuters market analyst Wang Tao.
He added that a sudden rise above 2,422 ringgit, however, will signal a false break below this level and the target at 2,341 ringgit has to be temporarily aborted. Malaysian palm prices, which set the tone for global prices, have lost nearly 10 percent since the start of the year. Prices in May dropped nearly 8 percent in its largest monthly decline since September 2012, hurt by a stronger ringgit and losses in competing soy markets. "External markets are on the weak side. Last Friday soy took a big hit. With this kind of sentiment - exports not up to expectations and soy closing down 90 points last Friday - you can't really expect the market to rally," the trader added. The US soyoil contract for July was flat in late Asian trade on Monday, while the most active September soybean oil contract on the Dalian Commodities Exchange lost 0.6 percent.
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