Malaysian palm oil futures slipped to a near-one-year low on Wednesday, stretching losses into a third straight session as a bout of technical selling dragged on prices that were already under pressure from weaker competing edible oils. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell to 2,239 ringgit in late trade, a level last seen on August 12, before settling 0.2 percent lower at 2,249 ringgit ($703) per tonne by the day's close.
Market players said technical selling pushed the palm market lower, adding to the more-than-15 percent losses chalked up this year. "The bears are having the upper hand, and they keep pressuring prices lower and lower," said a trader with a local commodities brokerage in Kuala Lumpur. Total traded volume on Wednesday was thin at 25,731 lots of 25 tonnes, much lower than the daily average of 35,000 lots. Technicals showed that Malaysian palm oil prices may drop further.
"A bearish target at 2,220 ringgit per tonne remains unchanged for palm oil as it approaches a support at 2,250 ringgit again," said Reuters market analyst Wang Tao. Losses in comparative US and China soy markets tracked by palm also weighed on the tropical oil. The US soyoil contract for December fell 0.2 percent in Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange lost 0.5 percent.
Anticipation of record production of soybeans in the US, the top exporter, has kept up pressure on the oilseed, with both government and private agencies forecasting a bumper crop ahead. Investors are also looking to industry data on Malaysia's palm oil end-stocks and supply at the end of July, which will be released by the Malaysian Palm Oil Board next Monday. A Reuters survey on Wednesday showed that Malaysian end-July palm stocks likely tightened to a more than 3-year low of 1.64 million tonnes after a festive season curbed output, although market players expect the squeeze to be short-lived.
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