Malaysian palm oil futures dropped to their lowest in almost two weeks on Wednesday as weak manufacturing survey data from China and a downward revision of US GDP figure stoked worries about a slowing global growth. News that China has scrapped orders for some 300,000 tonnes of refined palm oil on the back of over-booked cargoes and lower domestic prices did little to lift the futures market, which closed lower for the third straight day.
Palm oil jumped nearly 20 percent from an October low of 2,754 ringgit and has eased a little on eurozone debt crisis and concerns that the recent price run-up was over done. "The market was expecting some correction due to the past rise. Technically a correction at this point would be seen as something healthy for the market," said a trader with a foreign commodities brokerage in Kuala Lumpur.
Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange settled down 0.4 percent to 3,161 ringgit ($995) per tonne. Prices fell as low as 3,128 ringgit, a level last seen on November 11. Overall traded volumes stood at 23,557 lots of 25 tonnes each, lower than the usual 25,000 lots, on investor caution over the unfolding economic gloom.
Technicals remained bearish with Reuters analyst Wang Tao expecting palm oil will fall more to 3,092 ringgit per tonne as indicated by a double-top pattern and a Fibonacci retracement analysis. Fundamentals can turn more bullish with Malaysian Meteorological Department issuing orange stage warning that heavy rains could persist till Thursday and trigger floods in parts of Pahang - key oil palm growing area that accounts for 15 percent of production.
Heavy rains tend to reduce harvesting rounds in oil palm estates and floods will complicate the transport of the edible oil to mills and refineries. Buyers in India and Pakistan may rush in to snap up palm oil cargoes before any new price upswing makes the tropical oil expense as they restock after major festivals. US soyoil for December delivery edged down 1.9 percent and China's most active May 2012 soybean oil contract dropped 1.5 percent.