Malaysian palm oil futures declined to their lowest since December on Friday, as global market uncertainties diminished demand for the edible oil from top customers China and India, but a forecast dip in production after Malaysia's recent floods provided support. A drop in crude oil prices, which have more than halved since June, coupled with poor demand for palm oil in January have seen prices of tropical oil slip more than 3.5 percent this week.
"Globally there's a lot of uncertainty. China is not rushing to buy, nor is India or Western Europe," a trader with a foreign commodities brokerage in Kuala Lumpur told Reuters. By Friday's close the benchmark April contract was down 0.71 percent at 2,227 ringgit ($619) per tonne, its lowest level since December 26. "The weather and production are still supporting the market but exports are not moving. The ringgit is so weak but nobody is buying," the trader said.
Monsoon flooding across parts of Peninsular Malaysia and currently in Borneo has crimped supply of palm and will probably eat into stockpiles. Traded volume stood at 46,219 lots of 25 tonnes, well above the usual 35,000 lots traded per day. In other vegetable oil markets, the US soyoil contract for March dipped 0.19 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodity Exchange lost 1.07 percent.
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