Malaysian crude palm oil futures fell on Wednesday, pressured by concerns about slowing demand and the stronger ringgit currency, although hopes that the European Central Bank will offer cheap loans to European banks helped limit losses. The ringgit-priced palm oil feedstock is now more expensive for refiners as the currency gained further against the dollar, slashing gains in palm oil prices this month to 6.2 percent from Tuesday's 7 percent.
Malaysian export numbers for February also pointed to slowing demand prospects. Some market players attributed this to a shift in orders to top producer Indonesia, which halved its export taxes for refined products. "I think part of the reason exports are slowing could be Indonesia getting a bigger slice of the market share," said Selena Leong, an analyst at DMG & Partners Research in Singapore.
Benchmark May palm oil futures on the Bursa Malaysia Derivatives Exchange fell 0.8 percent to close at 3,270 ringgit ($1,092) per tonne. It touched an intraday high of 3,321 ringgit on Tuesday, the highest since June 9 last year. Traded volumes stood at 21,483 lots of 25 tonnes each, lower than the usual 25,000 lots. Malaysian palm oil exports for February fell 10.5 percent compared to a month earlier, said cargo surveyor Intertek Testing Services. Another cargo surveyor, Societe Generale de Surveillance, reported a similar downward trend, saying exports dropped 9.5 percent from January.
Reuters technicals analyst Wang Tao said palm oil will fall to 3,244 ringgit per tonne based on a wave cycle analysis. Ahead of a palm oil conference next week, Singapore-listed First Resources chief executive told Reuters on Wednesday the firm sees crude palm oil output rising by 10 percent this year. Other vegetable markets posted slight losses. The US soyoil contract for March delivery and the most active September 2012 soyoil contract on China's Dalian Commodity exchange both lost 0.1 percent.