Malaysian palm oil futures fell to one-week low on Tuesday as investors continued to book profits on a rally driven by strong demand and tight supplies. Although cargo surveyors said Malaysian exports hit above 1 million tonnes for the first 25 days of January, some traders were concerned the recent run-up in prices owing to tight supply would eventually slow demand.
A bearish technical outlook may have weighed on palm oil. A Reuters analysis showed the Malaysian market could fall to 3,650 ringgit per tonne. "Exports are still relatively good but technicals are negative. Traders may be unwinding positions ahead of a quiet trading next week due to the Lunar New Year" said a trader with a foreign commodities brokerage. The benchmark April 2011 crude palm oil contract on Bursa Malaysia Derivatives fell as much as 1.6 percent to 3,690 ringgit ($1,208), a level unseen since January 18. The contract then settled at 3,703 ringgit.
Traded volume stood at 24,436 lots of 25 tonnes each, slightly lower than the usual 15,000 lots. Cargo surveyor Intertek Testing Services said Malaysian palm oil exports rose 5.7 percent to 1.06 million tonnes for January 1-25, compared to the same period a month ago. Another cargo surveyor, Societe Generale de Surveillance, said exports in the same period fell 2.1 percent to 1.01 million tonnes.
Traders said the vegetable oil complex was trending lower on an improved weather outlook for Argentina that could relieve stress on soya crops hurt by the dry spell. US soyaoil for March delivery dropped 0.9 percent, reversing gains made earlier in Asian hours. The most-active September 2011 soyaoil contract on the Dalian Commodity Exchange fell 1.9 percent on profit taking after hitting a fresh peak of 10,858 yuan the previous day. In related markets, US crude futures fell for the second straight session thanks to a rise in US stocks and a weak technical outlook.