Malaysian palm oil futures tumbled as much as 2.6 percent to a near 2-week low on fears that June shipments may fall back after months of sustained buying by China and India. Traders are waiting for a slew of data on May palm oil output, exports and stocks to be issued by the Malaysian Palm Oil Board on Wednesday. Cargo surveyors will report on June 1-10 palm oil exports by the Southeast Asian country on the same day.
The benchmark August contract on the Bursa Malaysia's Derivatives Exchange settled down 62 ringgit to 2,458 ringgit ($698.9) per tonne after hitting a low of 2,454 ringgit, a level unseen since May 28. Overall volume shot up to 16,358 lots of 25 tonnes each.
"There is talk that exports will not be so good because China and India cannot continue to buy at such large quantities as they have done for the past three months," said a trader with a foreign commodities broker. Traders said if June 1-10 palm oil exports can exceed 400,000 tonnes prices could improve and level off any expected increase in production.
In the same period in May, exports were above 430,000 tonnes. But the Southeast Asian country's May palm oil stocks may still drop 2.3 percent to a 23-month low as exports and domestic demand combined would were slightly higher than output, although the pace of decline is slowing, a Reuters poll showed on Monday.
Technical analysts said the recent volatile run up in palm oil prices could lead to "shorting" on future rallies. "We continue to remain bearish on crude palm oil and plantation stocks on rallies for this week and advocate a selling on rallies stance for both, as India plans to import more soyoil than palm oil," said Maybank investment bank in a note to clients. Crude oil fell below $68 a barrel, putting pressure on US soyoil for July delivery, which fell 1.2 percent. The most active January 2010 soyoil contract on Dalian's Commodity Exchange dropped nearly 2 percent.
INDONESIA PALM TRADES In Indonesia, the world's top producer of palm oil, the Jakarta-based state marketing centre sold 4,000 tonnes of palm oil at a price of 7,659 rupiah ($0.762) per kg free on board Belawan and Dumai, against 7,886 rupiah per kg on Friday. Producers in Medan, home to Indonesia's main palm oil export port Belawan, did not hold a palm oil tender.
Meanwhile, refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 7,700 rupiah per kg, down from 8,000 rupiah per kg on Friday. In the Malaysian physical market, bid and ask prices for June delivery were quoted at 2,470/2,500 ringgit in southern region. Trades were done between 2,470 and 2,500 ringgit.