Malaysian crude palm oil futures dropped 4.0 percent by midday on Tuesday as the market resumed trading after a long weekend, tracking falls in the prices of crude oil and soybean oil, dealers said. Palm oil, used to make products from soap to biodiesel, has fallen about 17.5 percent so far this year as high stocks and news of defaults from key buyers India and China have kept traders on tenterhooks.
The benchmark November crude palm oil contract on the Bursa Malaysia Derivatives Exchange edged down 105 ringgit, or 4.0 percent, to 2,515 ringgit ($735) a tonne by the lunch break after trading as low as 2,495 ringgit a tonne.
Palm oil fell despite good export figures for August. Cargo surveyor Intertek Testing Services reported on Tuesday exports of Malaysian palm oil products for August rose 8.12 percent to 1,490,527 tonnes from 1,378,537 tonnes shipped in July. "It is a good number but since it is the first trading day after a long weekend, people are still uncertain where the market is going to go," one trader said.
Other contracts dropped between 41 ringgit and 110 ringgit. Overall volume stood at 3,613 lots of 25 tonnes each. Oil extended losses on Tuesday after a steep $4 plunge a day before on speculation that a surprisingly weak Hurricane Gustav likely spared key US Gulf oil infrastructure.
US crude fell $4.39 to $111.08 a barrel at 0517 GMT. The November soybean contract at the New York Board of Trade retreated 2.7 percent in Asia trading on Tuesday. September soyoil fell 2.94 percent to 51.83 cents per lb. Trading is expected to be quiet today on a prolonged holiday for the start of Ramadan in some key palm oil producing areas, another dealer said. In the physical market in Malaysia, crude palm oil for delivery in September stood at 2,525/2,540 ringgit a tonne in the south region. No trade was done.