Malaysian crude palm oil futures fell more than 1 percent on Wednesday and seemed poised to break the key psychological support of 1,250 ringgit as the market tracks sharp falls in rival US soyoil, dealers said. The benchmark third-month crude palm oil contract on Bursa Malaysia Derivatives, April, settled down 16 ringgit, or 1.3 percent, at 1,258 ringgit ($331.05) a tonne.
It fell to a low of 1,252 earlier in the day, just two ringgit above the key support. Other traded contracts closed down 9 to 17 ringgit. Overall market volume was heavy at 5,949 lots.
"The selling pressure is very strong," said a trader at a foreign-owned oils brokerage in the Malaysian capital.
"We could be testing 1,250 soon," he said, referring to the benchmark April contract.
Soyoil futures on the Chicago Board of Trade hit contract lows on Tuesday, with deliveries for March down 0.32 cent at 19.04 cents per lb. Soy and palm compete for similar export markets and their prices often move in step. Palm oil futures in Kuala Lumpur have lost more than 3 percent of their value since last week, adjusting to the bearish Chicago market.
Looking ahead, dealers said fundamentals could remain weak until the release of February's first export estimates for the first 10 days of the month.
The state-run Malaysian Palm Oil Board will also release next week official crop and trade data for January, giving an idea of immediate supply and demand.
Societe Generale de Surveillance, an independent surveyor of Malaysian oil palm cargoes, said last week exports fell 5.8 percent in January from December.
Dealers said a tight freight situation was also keeping a rein on palm oil exports.
Palm oil shippers have been left with few options to carry their oil since mid-January as buyers of "clean petroleum products" - fuel mainly used for industrial purposes - started paying more for vessels amid a spike in bunker oil prices.
Freight brokers said on Monday ships to ferry palm oil could be in short supply until mid-February as movement of industrial fuels dominate.
In physical crude palm oil, contracts for February and March saw bids at 1,267.50 ringgit a tonne and offers at 1,272.50 ringgit in Malaysia's southern and central regions.
February bids/offers closed at 1,282.50/1,285 on Monday. The market was closed on Tuesday for a public holiday.
Trades for February were reported on Wednesday at 1,270-1,265 ringgit in both the southern and central regions. March saw trades at 1,267.50-1,265 in both regions.
PALM OIL FUTURES:
January (south): 1272.50
Open/High/Low: 1269/1269/1252
Previous close: 1285
PALM OIL PHYSICALS:
April (third month): 1258
Previous settlement: 1274
FUTURES: Benchmark April down 16 ringgit at 1,258 ringgit ($331.05) a tonne.
PHYSICALS: February offers down 12.50 ringgit a tonne.