Malaysian palm oil falls

30 Sep, 2008

Malaysian palm oil futures plunged more than 8 percent on Monday due to losses in crude oil and demand concerns. The benchmark December contract on the Bursa Malaysia Derivatives Exchange lost 188 ringgit, or 8.13 percent, ending at 2,125 ringgit a tonne.
The price of the tropical oil, used in the production of products ranging from soap to biofuel, has dropped nearly 33 percent this year, pressured by bumper harvests, defaults by Asian buyers, and as Indonesia cut its export taxes.
Contracts for other traded months dropped 133 ringgit and 201 ringgit. The overall volume was 18,832 lots of 25 tonnes each. Crude oil dropped $3.38 to $103.53 a barrel in electronic trade at 1037GMT. "On a daily basis, we can say that a lot of influence has been coming from weaker crude oil as well as soybean prices," said Ben Santoso, an analyst at DBS Vickers in Singapore. He said traders also were concerned over Malaysian palm exports as global demand slows, while a lower export tax rate may have made Indonesian palm more attractive.
"I think the port of origin might have shifted from Malaysia to Indonesia for some buyers. That might have contributed to the drop in Malaysian palm exports," he said. Exports of Malaysian palm oil products for September 1-25 fell 14 percent to 981,637 tonnes, from 1,141,494 tonnes shipped between August 1-25, cargo surveyor Intertek Testing Services said on Thursday. "The price has dropped at a faster pace in late trade due to panic-selling," a trader at a local brokerage said. He said price weakness across the board for commodities would continue to dampen sentiment for palm oil, with the immediate support level seen at around 2,050 ringgit.
NO PHYSICAL TRADE IN INDONESIA: In Indonesia, producers are not expected to participate in any tender of palm oil products this week due to the Eid-ul Fitr holiday. The country with the biggest Muslim population will celebrate the festival on October 1-2 to mark the end of Ramazan.

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