Malaysian palm oil futures fell at the start of 2016 trading on slowing exports as demand from top consumer China is unlikely to improve despite the upcoming Lunar New Year holiday. The benchmark palm oil contract for March on the Bursa Malaysia Derivatives Exchange lost 2.1 percent on Monday, reaching 2,433 ringgit ($560.34) a tonne at the end of the trading day.
Palm futures, which declined for a second consecutive session from an 18-month high, fell to as low as 2,429 ringgit, the lowest since December 21, 2015. "Sentiment wise, the market is still looking at demand. The market should correct more on the down side until demand comes in," said a trader from Kuala Lumpur, adding that traders have yet to see much physical buying from China.
"There are tank constraints because of high stocks still. Everyone has stock concerns but production may be down, cushioning a sharp drop in prices." Palm output is anticipated to fall as the growing cycle enters the year-end, low-growth period as rains increase in Southeast Asia's growing areas. Weather patterns have also contributed to output concerns; the dry El Nino impact is expected to lower palm's fruit yields and monsoon rains are seen curbing production.
Malaysia saw record-high inventories of 2.9 million tonnes at end-November and falling exports did little to draw down stockpiles in December. Shipments for the full month of December fell 5-6 percent compared with November. Traded volume stood at 35,782 lots of 25 tonnes each at the close of trade. In competing vegetable oil markets, the US March soyoil contract is down 1.4 percent, while the May soybean oil contract on the Dalian Commodity Exchange lost 0.8 percent.
Comments
Comments are closed.