Malaysian crude palm oil futures remained weak on Thursday with buyers sidelined by a fresh retreat in US soyaoil and disappointing palm oil export data released a day earlier. But the market looked well supported at above 1,400 ringgit a tonne despite talk of a sharp slide in demand and growth in production for July, said traders.
"The prices aren't great, but I think we'll stick above 1,400 - for now at least," said a trader.
The benchmark third-month crude palm oil on Bursa Malaysia Derivatives, October, closed down 3 ringgit at 1,408 ringgit ($370.53) tonne. The low for the day was 1,406. The contracy briefly broke 1,400 ringgit on Wednesday, touching 1,398 at one point, before bouncing back on technical support. Other traded months on Thursday were down 1 to 4 ringgit.
Trade was light, at 2,228 lots of 25 tonnes each. The market usually sees 6,000 lots or more on a busy day. "People don't want to commit unless there's a real reason," said a trader. "At the moment, there's little incentive for buyers to go long, with the way production could be this month."
Output of palm oil in Malaysia, the world's largest producing country, could grow three percent in July from the official figure of 1.2 million tonnes in June, dealers said.
That contrasted with the 26 percent drop in exports for July 1 to 20, forecast by the market's leading tracker of palm oil shipments, Societe Generale de Surveillance.
Dealers said prices were also weighed down on Thursday by a fresh slide in US soyaoil, which has supported most of the gains in palm oil over the last fw months.
Soya and palm compete for export market and their prices often move in step. Soyaoil futures on the Chicago Board of Trade were down in Thursday's electronic session, with nearby August showing a drop of 0.37 cent to 24.36 cents by 1000 GMT. The CBOT's electronic session commences during Asian market hours and ahead of the formal trade in Chicago, which begins at 1400 GMT. In physical dealings of crude palm oil on Thursday, July saw final trades of 1,405 ringgit a tonne in both the southern and central regions of Malaysia.
Offers were seen at 1,410 ringgit and bids at 1,405.
PALM OIL FUTURES:
Open/High/Low: 1410/1411/1406.
Previous close: 1410.
PALM OIL PHYSICALS:
October (3rd month): 1408.
Previous settlement: 1411.
FUTURES:
Fell after a fresh drop in Chicago soyaoil. Traded months down 1 ringgit to 4 ringgit a tonne.
PHYSICALS: Flat.