Malaysian palm oil futures closed lower on Wednesday, as concerns that the euro zone debt crisis could slow growth offset ddemand chasing tighter stocks Uncertainty over Europe's debt crisis comes as investors focus on the Greek elections on June 17 that could lead to the nation's exit from the currency bloc.
But analysts remained upbeat on lower stocks in No 2 producer Malaysian and crude palm oil's discount of above $160 per tonne to competing soybean oil, a tad higher than a 5-year average level of $158 per tonne. The US Department of Agriculture made a slight downward revision in its outlook for soybean ending stocks for both old- and new-crop marketing years, providing support for palm oil prices.
"In addition, supply shortage due to the tree stress effect (in Malaysia) and monetary easing policy from China should continue to support crude palm oil prices," Alan Lim, research analyst with Malaysia's Kenanga Investment Bank, said in reference to weak production growth. Benchmark August palm oil futures on the Bursa Malaysia Derivatives Exchange lost 0.5 percent to close at 2,950 ringgit ($930) per tonne. Traded volumes picked up from just 4,331 lots before the midday break to 18,627 lots of 25 tonnes each, but still lower than the usual 25,000 lots. In other vegetable oil markets, US soyoil for July delivery gained 0.4 percent in late Asian trade. The most active January 2013 soyoil contract on the Dalian commodity exchange closed 0.2 percent lower.