Malaysian palm futures fell 1.7 percent on Thursday as traders paused to take profits from a rally triggered by expectations of lower domestic inventories and strengthening global soyoil markets. Palm oil, used in products ranging from chocolates and cosmetics to biofuels, has climbed 39 percent so far this year and notched near eight-month highs earlier this week.
"This market was overbought and is now toppish, there has to be some consolidation before we move higher," said a trader with a local commodities brokerage. But losses were limited on firmer global soyoil markets, traders said. "US soyoil is moving our markets since the weaker dollar against most currencies is making US commodities cheaper," a trader with a foreign commodities brokerage said.
"Palm loses out a little on the appreciation of the ringgit but the influence of soyoil negates that." The benchmark July contract on the Bursa Malaysia Derivatives Exchange settled down 40 ringgit at 2,358 ringgit ($655) per tonne after posting gains in the morning session. Other traded months rose between 30 and 75 ringgit while the November contract inched up. Overall volume climbed to 16,116 lots from the normal 10,000 lots of 25 tonnes each.
Major commodity prices were little changed after data showed Chinese gross domestic product growth slowed to a record low 6.1 percent in the first quarter, in line with expectations. Oil fell back below $50 a barrel on Thursday, after surging more than 2 percent as equity markets rallied on signs the US recession was easing, boosting hopes of a demand recovery in the world's top energy consumer.
Vegetable oil markets are taking more guidance from weak soy stocks and droughts in South America rather than oil prices, which usually wield influence as soyoil and rapeseed are used as a feedstock for biofuels that compete with petroleum diesel. The most active September soyoil contract on China's Dalian Commodity Exchange jumped 2.1 percent. Soyoil for May delivery at the Chicago Board of Trade slipped in late Asian trade.
INDONESIA PALM TRADES In Indonesia, the world's top producer of palm oil, the Jakarta-based state marketing centre said it sold 7,000 tonnes of palm oil at a top price of 8,189 rupiah per kg. In the previous tender a day earlier, the centre only sold palm oil for exports at $720 per tonne FOB Belawan and Dumai. Producers in Medan - home to Belawan port, Indonesia's main palm oil export port - sold palm oil at 8,200 per kg, against 8,150 rupiah per kg on Wednesday.
Meanwhile, refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 8,400 rupiah per kg, against 8,450 rupiah per kg a day before. In the Malaysian physical market, trades were done at 2,550 ringgit for April and May in the southern and central regions.