Malaysian palm oil futures eased 1.2 percent on Wednesday as weak crude and competitive vegetable oils weighed on prices of the tropical oil ahead of export data due out later this week. The benchmark palm oil contract for November on the Bursa Malaysia Derivatives Exchange closed 1.2 percent lower at 2,034 Malaysian ringgit ($495.86) a tonne.
It hit a low of 2,024 ringgit in early trade before recovering some of its losses by the close. Traded volume stood at 43,673 lots of 25 tonnes each, above the roughly 35,000 lots usually traded per day. "It's in line with what's happening to soy oil and Dalian," said a trader with a foreign commodities brokerage in Kuala Lumpur. "Tomorrow the first 20-day export figure will be out. Based on the last 15 days, it won't be that rosy."
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to release data on Malaysia's August 1-20 palm oil exports on Thursday. The US September soyoil contract saw slight increase of 0.07 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange was 0.4 percent lower. "Weakness in crude oil and Dalian may pressure prices," added a second palm trader.
Oil prices steadied on Wednesday, consolidating after a six-week rout driven by global oversupply and concerns about falling demand in Asian economies and the United States, but analysts expects prices to remain low. Palm oil may break support at 2,017 ringgit per tonne and fall further towards the next support at 1,997 ringgit, said Wang Tao, a Reuters market analyst for commodities technicals.
An uncertain demand outlook, exacerbated by economic worries in top buyer China, was also a concern for palm traders. Offering some support, the Malaysian ringgit is Southeast Asia's worst performing currency this year, and is the currency that benchmark palm is priced in.
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