Malaysian palm oil futures slipped to their lowest in more than five months on Wednesday, tracking a downward trend in broader commodities markets as investor caution over the euro zone debt crisis resurfaced. Germany has dismissed a French-led call for euro zone governments to issue common bonds, raising fears of a potential Greek exit from the single currency ahead of a meeting of European leaders.
Palm oil futures were not spared from the broad-based commodities sell-off, losing almost 3 percent to close and just above the psychologically key level of 3,000 ringgit. "The palm oil market was under pressure today from the beginning. External oilseed markets were down so palm oil fell in line with market sentiment," said a trader with a foreign commodities brokerage in Malaysia.
Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange lost 2.9 percent to close at 3,019 ringgit ($961) per tonne after touching a low of 2,993 ringgit, a level not seen since December 19. Traded volumes stood at 55,312 lots of 25 tonnes each, more than double the usual 25,000 as traders rushed in to liquidate their positions. Reuters market analyst Wang Tao expressed a bearish view, saying palm oil would drop further to 2,971 ringgit, the December 15 low, as it has dropped below 3,019 ringgit.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance both reported a slight increase in shipments for Malaysian palm oil for May 1-20. In other vegetable oil markets, the most active US soyoil contract for July slipped 1.6 percent while the most active Dalian soyoil September contract tumbled 2.1 percent.