Palm oil eases

Malaysian palm oil futures slid for a second session on Wednesday as traders squared positions ahead of key supply and demand data from the United States and Malaysia. The decline were limited by forecasts of lower production in the months ahead due to dryness from the El Nino weather pattern. At the same time, demand is likely to rise as top producer Indonesia uses more palm oil to make biodiesel.
The February benchmark palm oil contract on the Bursa Malaysia Derivatives Exchange closed down 0.5 percent, or 11 ringgit, to 2,385 ringgit ($559) a tonne. Traded volume stood at 45,701 lots of 25 tonnes each. "Right now there is too much oil around, we are expecting lower production in December but the decline in not going to be a lot," said one trader at a plantation company in Malaysia's Sabah state.
"We expect the impact of El Nino to start cutting yields next year." The US Department of Agriculture will issue later on Wednesday its monthly crop report which will shed light on production and demand for soybeans and other agricultural products. The crop data at 1700 GMT is expected to indicate lower soybean supply, as well as increased corn and wheat supply, a Reuters poll of analysts showed.
Malaysian November palm stocks likely topped a previously reached near-15-year high on slowing exports, despite output falling in line with a year-end seasonal trend, a Reuters poll showed. The Malaysian Palm Oil Board data is due on December 10 after 0430 GMT. Palm oil may revisit its December 8 low of 2,380 ringgit per tonne as the correction from the December 7 high of 2,438 ringgit is not yet completed, Wang Tao, Reuters analyst for commodities and energy technicals said in a report.
Australia's weather bureau said the current El Nino event is near peak intensity and likely to persist well into 2016, although some indicators are showing signs of easing. El Nino typically brings rains and flooding to parts of the Americas and drought to eastern Australia and parts of Asia. Biodiesel producers in Indonesia are planning to boost output capacity next year by almost a fifth to 8 million kilolitres to meet higher mandates. In rival vegetable oil markets, US January soyoil contract slid 0.5 percent, while the May soybean oil contract on the Dalian Commodity Exchange lost more than 2 percent.