Malaysian palm oil futures fell to a two-week low on Friday, racking up a fourth straight day of losses as signs of weaker demand and declining vegetable oil markets sapped sentiment at a time when output is swelling. The market has been weighed down for much of the week by a build-up in Malaysian inventories, soaring production and fears that commodity markets will soon reverse gains.
"There is no real impetus for palm oil to go higher unless crude oil and soyoil start rallying in a big way," said a trader with a foreign commodities brokerage in the Malaysia capital. "The bearish sentiment is driving the technical players to also sell down," he added.
June palm oil on the Bursa Malaysia Derivatives Exchange settled down 1.4 percent at 3,236 ringgit ($1,070) a tonne after falling as low as 3,232 ringgit per tonne, a level unseen since March 29. Traded volume stood at 23,000 lots of 25 tonnes each compared to the usual 25,000 lots.
Earlier in the day, the market made little headway after cargo surveyor Intertek Testing Services (ITS) said Malaysia's April 1-15 palm oil exports slumped 20.6 percent to 418,134 tonnes from the same period a month ago. Another surveyor, Societe Generale de Surveillance (SGS), said exports fell 13.1 percent in the same period, prompting traders to say the ITS estimate was too low.
"SGS data was more accurate but it signals that exports are still in a severe downtrend," said another trader in Malaysia. The trend for demand has turned bearish, with some traders saying price sensitive buyers like India were holding back orders as local vegetable oil prices were cheaper due to ample domestic oilseed crop. Trade data on Friday showed India's vegetable oil imports fell for the fifth straight month in March.
Chicago soyoil for May delivery dropped 0.6 percent in late Asian trade as the oilseed markets is likely to come under pressure due to slowing demand from China. The most-active January 2012 soyoil contract on the Dalian Commodity Exchange ended 1.3 percent lower after Beijing last week announced plans to release oilseed reserves to tame food inflation. "Market sentiments are bearish," said a trader with a Shanghai-based foreign brokerage. "China soyoil, for example, could drop more than 200-300 yuan from its lowest level hit today."