Malaysian crude palm oil futures finished lower on Wednesday in see-saw dealings, with traders guessing on the market's next move. Traders said they expect trading to remain choppy as weakness in rival Chicago soyaoil was offset by concerns about a smaller oilseed crop in India due to poor monsoon rains.
"It has been a see-saw market this week, with people buying on the Indian factor and quickly taking profit due to weaker soyabean oil," said a trader.
India, the world's top edible oil buyer, is expected to sharply boost its imports in the oil year beginning in November as poor rains are seen hitting the domestic oilseed output, traders and industry officials said on Wednesday.
Imports mainly from Malaysia, Indonesia, Argentina and Brazil are seen surging by 800,000 to 1 million tonnes in the next year from about 4.1 million tonnes in 2003/04, they said.
Deficient rains so far are expected to lower India's oilseeds output in the current winter season by at least 20 percent from 13.9 million tonnes a year ago, traders said.
Oil availability from winter crops, sown in June and July, is expected to drop by about 0.8 to 1.0 million tonnes. But the fall could be even more if the rains are not good in the coming weeks, they said.
The benchmark third-month palm oil futures on the Malaysia Derivatives Exchange, October, ended down five ringgit at 1,432 ringgit ($376.84) a tonne, after trading between 1,419 and 1,447.
Other traded contracts were down four to 13 ringgits. Overall volume rose to 5,461 lots from Tuesday's 5,026. Traders said market participants were also awaiting export data for the whole of July due on Monday.
Society Generale Surveillance Malaysia Sdn Bhd (SGS), the market's main cargo tracker, had estimated Malaysian oil palm product exports for July 1-25 at 889,068 tonnes, up 8.8 percent from the 816,853 tonnes shipped in June 1-25.
Analysts have said an export of at least 1.1 million tonnes was required for the whole of July to mitigate stocks of 1.2 million tonnes carried forward from June. Chicago Board of Trade (CBOT) soyaoil futures ended 0.01 to 0.25 cent per lb lower on Tuesday, with August down 0.25 at 24.24 cents, pressured by the lower close in soyabeans.
Soyaoil and palm oil compete for the same export markets and their prices often move in step. Physical crude palm oil prices also retreated in late trade after holding steady. July/August saw buyers/sellers at 1,465/1,475 ringgit a tonne in both the southern and central regions, down from Tuesday's close of 1,480/1,490. Trades were reported at 1,470-1,460 ringgit in both regions.
PALM OIL FUTURES:
July (south): 1475
Open/High/Low: 1440/1447/1419
Previous closes: 1490
PALM OIL PHYSICALS:
October (3rd month): 1432
Previous settlement: 1437
FUTURES: Benchmark third-month September down five ringgit to 1,432 ringgit ($376.84) a tonne.
PHYSICALS: Also down.