Malaysian palm oil futures reversed gains to hit an 11-month low on Wednesday as worries about rising production and falling demand offset initial support from a weak currency and firmer comparative vegetable oils. By the close, the benchmark palm oil contract for October on the Bursa Malaysia Derivatives Exchange had eased 1.3 percent to 2,035 ringgit ($525) a tonne.
Prices earlier touched a high of 2,082 ringgit but turned negative later in the session to touch an 11-month low of 2,023 ringgit. Palm is down 4 percent so far this month.
Traded volume stood at 37,256 lots of 25 tonnes each, above the roughly 35,000 lots usually traded by the close.
"Production in the third quarter will be excellent," said a trader with a foreign commodities brokerage in Kuala Lumpur. "Demand is tapering (off) at rates not seen before. India and China are on the sidelines watching and commodity funds are largely sellers."
In other vegetable oils, the US August soyoil contract added 0.7 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange climbed 1.6 percent.
Palm oil stocks in Malaysia, the world's No 2 oil palm producer after Indonesia, likely rose in July as output picked up, while lower demand for exports after the end of the Muslim holy month of Ramadan also added to inventory levels, a Reuters poll showed. As production looks set to rise during the coming peak weeks, the uncertain demand outlook remains, made worse by economic concerns and top buyer China.
Asian share markets were in a mixed mood as the mounting risks of a hike in US interest rates as early as next month lifted the dollar and bond yields, pressuring currencies across the region.
Comments
Comments are closed.