Palm oil down

Malaysian palm oil futures slid to a near three-week low on Tuesday, stretching its losing streak into a fourth session following heavy losses in overseas soyoil markets, and as investors fretted about rising stocks of the tropical oil. Soybean prices fell to near four-month lows after the US Department of Agriculture surprised the market with projections for bigger stockpiles and record production late Monday.
USDA reported June 1 soybean stocks at 405 million bushels, above market estimates of 378 million, and forecast soybean plantings up 11 percent on year to a record high 84.8 million acres. "The major factor is the weakness in soybean oil, due to record high planting acreage, which was confirmed by the recent USDA report. That is the main reason why palm prices fell sharply today and is still maintaining at the low," said a trader with a local commodities brokerage.
The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell to a June 12 low of 2,385 ringgit in early trade, before settling at 2,418 ringgit ($754) per tonne by Tuesday's close, a 0.3 percent drop. Total traded volume stood at 57,586 lots of 25 tonnes, much higher than the average 35,000 lots. Technicals showed that Malaysian palm oil is expected to slide more to 2,341 ringgit per tonne, as it has broken below a support at 2,422 ringgit, said Reuters market analyst Wang Tao.
Malaysian palm prices fell nearly 8 percent in the second-quarter this year to record its biggest quarterly loss since September 2012, hurt by poor export demand, a strong ringgit and rising inventory levels. Market participants said the prospects of bigger stockpiles in Malaysia, which have grown continuously since March to stand at 1.84 million tonnes at end-May, will likely continue to pressure prices despite a small pick up in export demand.
"There's the fear of rising palm stocks," the Kuala Lumpur-based trader added. "The recent better exports is not going to stop stocks from rising above two million tonnes in 2-3 months time." Cargo surveyors on Monday reported that exports of Malaysian palm oil product rose between 4.6-5.8 percent in June compared to a month ago, thanks to firm demand from India and China. In competing vegetable oil markets, the most active soybean oil contract on the Dalian Commodities Exchange plunged 2.7 percent in late Asian trade, while the US soyoil contract edged up 0.3 percent.