Malaysian palm oil dived for a second straight day on further liquidation of long positions, and selling by those fearing more competition from Indonesian palm products as the rupiah weakened.
A soft soyaoil futures market in Chicago, unimpressive export estimates of palm oil for August 1 to 25 from cargo surveyors, and a bearish supply-demand survey by Reuters for palm oil in August, were other factors for the decline.
The third-month crude palm oil futures contract on Bursa Malaysia Derivatives, November, ended 15 ringgit down at 1,365 ringgit ($364) a tone. It has lost 28 ringgit, or two percent, since on Wednesday.
The broader futures market fell 14 to 20 rangiest on Thursday.
Volume totalled 5,738 lots of 25 tones each, about 80 percent than on Wednesday's trade. November saw an intrude low of 1,363 ringgit a tone. Dealers expected it to find immediate support at between 1,360 and 1,355 ringgit.
"But we could also see a free fall," said one trader. "People have been waiting to sell and are finding the excuse now from the weakening rupiah and the poor outlook for palm oil despite the approaching peak period for demand."
The rupiah hit new 3-1/2 year lows of 10,255 to the dollar on Thursday. It fell to 10,300 a day, in one of its biggest single-day drops since May 2004. A weaker rupiah makes palm oil exports from Indonesia more competitive against those of Malaysia.
Malaysia is the world's largest palm oil producer and exporter, while Indonesia ranks second.
Soyaoil futures on the Chicago Board of Trade extended on Wednesday's losses on Thursday's electronic trade, with deliveries for September and December sliding an additional 0.05 and 0.07 cents a lb., respectively.
Society General de Surveillance (SGS), the leading tracker of Malaysian palm oil shipments, said exports for August 1 to 25 were estimated to have grown 10 percent from July 1 to 25. "That's no growth if you ask me," said another trader.
"They reported better percentages." SGS had estimated a rise of 12 percent for August 1 to 20 shipments, 17 percent for August 1 to 15, and 19 percent for August 1 to 10. Dealers had expected a steady growth in demand for palm oil as they approached September a month, which usually saw huge buying from clients in Pakistan, India and the Middle East for festivities that stretched till November.
But with rains and change in wind direction having scattered the pollution and an international firefighting team ready to douse new hotspots that show up on Indonesia's island of Sumatra impact on Malaysia's production has been limited.
PALM OIL FUTURES:
August (south): 1360
Open/High/Low: 1380/1383/1363.
Previous closes: 1380
PALM OIL PHYSICALS:
November (3rd month): 1365.
Previous settlement: 1380
FUTURES:
Down on liquidation, with dealers pegging support for the third month contract at 1,360-1,355 ringgit
PHYSICALS:
Also down, following futures.