Malaysian palm oil futures slid for a third consecutive session on Thursday to hit a one-week low as the market faced headwinds from slowing exports and rising inventories. Exports of Malaysian palm oil products for December 1-10 fell 35.5 percent to 280,445 tonnes from a month earlier, cargo surveyor Intertek Testing Services said.
Cargo surveyor Societe Generale de Surveillance reported a 33.7 percent decline in exports during the period from a month ago. The February benchmark palm oil contract on the Bursa Malaysia Derivatives exchange closed down 0.4 percent, or 10 ringgit, at 2,374 ringgit ($558) a tonne. It hit an intra-day low of 2,350 ringgit a tonne, lowest since December 3.
Traded volume stood at 32,948 lots of 25 tonnes each. "We are seeing a huge decline in exports and that is really bearish for prices," said one Kuala Lumpur-based trader. "I don't think the market was expecting more than 35 percent drop in exports." Malaysia's palm oil stocks rose 2.6 percent to an all-time high at the end of November as exports took a bigger hit due to increased competition, industry regulator Malaysian Palm Oil Board (MPOB) said after the market closed for afternoon break.
Palm oil stocks in Malaysia, the world's second largest producer, rose to 2.91 million tonnes from a revised 2.835 million tonnes a month ago, while exports fell 12.4 percent to 1.5 million tonnes in November. The MPOB data also showed an 18.87 percent fall in November production at 1.65 million tonnes. Production in Malaysia and Indonesia is seen declining further next year as dry weather effects from the El Nino impact fresh fruit yields.
In rival vegetable oil markets, the US January soyoil contract slid 0.5 pct, while the May soybean oil contract on the Dalian Commodity Exchange fell 0.8 percent. Palm oil sometimes takes price direction from the crude oil market because of increasing use of vegetable oils in making renewable fuels which compete with fuels refined from crude.
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