Palm oil slips

Malaysian palm oil futures slipped to a near 10-month low on Tuesday, following losses in Chinese soy markets and on worries of bumper soy crops, although anticipation of tighter palm supplies curbed losses. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,272 ringgit per tonne in late trade, their lowest since September 27, before settling at 2,280 ringgit ($718) by the day's close, a 0.7 percent drop.
While bearish external factors such as forecasts for an excellent soybean harvest and weakness in comparative soyoil markets continue to weigh on palm, market participants said prices were underpinned by prospects of a palm oil supply squeeze in the coming months. "Prices are drifting sideways now - external conditions are bearish, but palm is friendly," said a trader with a foreign commodities brokerage in Kuala Lumpur.
Palm oil inventories in Malaysia, the world's No 2 producer, slid to a 1-year low of 1.66 million tonnes at end-June. Total traded volume on Tuesday stood at 35,753 lots of 25 tonnes, just above the average 35,000 lots. Technicals show Malaysian palm oil is expected to fall into a range of 2,250-2,268 ringgit per tonne, driven by a wave 3, said Reuters market analyst Wang Tao.
Better harvesting conditions for the US soybean crop have paved the way for a bumper supply of the competing oilseed, which would weaken soyoil prices and potentially channel food and fuel demand away from palm. Cargo surveyors reported that exports of Malaysian palm oil products during July 1-20 rose between 8 and 10 percent from a month ago, with exports to China nearly doubling compared with the same period in June.
Indonesia, the world's biggest palm grower, said it expects to export between 19 million and 20 million tonnes of palm oil in 2014, a decline of up to 9.5 percent from the 21 million tonnes sold last year. Indonesian exports in the first half of 2014 amounted to 9.75 million tonnes, down from around 11 million tonnes in the first half of 2013, according to GAPKI. Malaysia exported 8.1 million tonnes in the same period, compared with 8.8 million tonnes last year, according to data from industry regulator the Malaysian Palm Oil Board. In competing vegetable oil markets, the US soyoil contract was nearly flat in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange fell 0.4 percent.