Malaysian palm oil down for third day

Malaysian palm oil was down for a third day on Monday as crude oil slipped to a four-year low, reducing prospects of demand for biodiesel in addition to large harvests for palm and soy and slack demand for edible oils. "The ray of hope that the additional soyoil and palm oil being produced in the world might get taken up by biodiesel is evaporating fast," a trader with a foreign commodities brokerage in Kuala Lumpur said.
Brent crude oil fell below $88 a barrel on Monday, its lowest in almost four years, after key Middle East producers signalled they would keep output high even if that meant lower prices. Weaker crude prices make palm oil a less attractive blending option for biodiesel feedstock. By Monday's close, the benchmark contract on the Bursa Malaysia Derivatives Exchange had lost 1.15 percent to 2,165 ringgit ($664.01) per tonne.
Total traded volume on Monday stood at 37,426 lots of 25 tonnes, above the daily average of 35,000 lots traded. Excessive supply and seasonal trends that normally weaken demand for palm oil were adding to uncertainty on prices, traders said. "The demand time for the Indian continent is over. Deepavali is around the corner. In Pakistan, Eid is finished. China's winter is coming. So the real demand pull may not be there in the coming days," the trader said.
Religious festivals are typically times when countries consume more edible oils, while China typically consumes less palm oil during winter because domestically produced soyoil keeps better. A largely stable ringgit provided some support to prices, however. The ringgit held against the dollar on Monday, moving only 0.14 percent after slipping 0.5 percent on Friday.
A weaker ringgit against the dollar can encourage trade as foreign palm oil buyers get more for their money. Technicals showed palm might break a support at 2,163 ringgit per tonne and fall further toward the next support at 2,125 ringgit, as a correction from the October 1 high of 2,223 ringgit has not completed, Reuters market analyst Wang Tao said.
Soybeans firmed slightly after a sharp 2 percent drop in the previous session. The USDA estimated the US soybean crop would be 17 percent above the recently revised 2013 crop but below the average of trade expectations. In competing vegetable oil markets, the US soyoil contract for December held steady, up 0.03 percent, in late Asian trade, while the most active January soybean oil contract on the Dalian Commodities Exchange was down 0.27 percent.