Malaysian crude palm oil futures fell about on Monday, following a slide in soyoil prices, a drop in crude oil, and worries about a build-up in palm oil supplies, dealers said. The benchmark October contract on the Bursa Malaysia Derivatives Exchange closed down 60 ringgit at 2,890 ringgit ($885) a tonne, after trading as low as 2,820 ringgit, a level not seen since October 31, 2007.
"We don't see any good support for the market. Soyoil is down, crude oil is down, and the fundamentals are weak," said a dealer in a local brokerage firm. Malaysia and Indonesia, the world's top palm oil producers, are in a high production cycle, and analysts predict a bumper harvest to last until September. Dealers said stocks at the end of July probably stood at above 2 million tonnes, as demand was not yet sufficient to soak up supply.
Contracts for other traded months fell between 55 ringgit and 72 ringgit. Overall volume stood at 12,336 lots of 25 tonnes each. Soybean futures on the Chicago Board of Trade slipped on Friday on forecasts for mild Midwest weather at the start of the key yield-determining period for soybeans, traders said. August soyoil was down 1.65 cents at 56.61 cents per lb. But the contract was down a further 1.19 cents at 55.56 cents per lb during Asian trading on Monday.
Traders have said the market would go even lower on expectations of a good harvest and weather in the US soybean-growing areas. US weather in August is key to soybeans, as it is the time when the plants set pods that determine yield and production. Meanwhile, crude oil steadied below $126 a barrel on Monday on concerns over Opec producer Iran's nuclear programme. US light crude for September delivery inched lower $0.10 cents to $125 a barrel by 1040 GMT.
Cargo surveyor Intertek Testing Services reported exports of Malaysian palm oil products for July rose 27 percent to 1,378,537 tonnes from the previous month, showing demand started to trickle in. Another surveyor, Societe Generale de Surveillance, reported an increase of 26.2 percent to 1,396,739 tonnes.