Malaysian palm oil futures tumbled to the lowest in more than two years on Monday as investors fretted over rising stocks that may outpace slowing demand and the uncertain global economic outlook. A cargo surveyor reported a dip in Malaysia's September exports from a month ago, which could lead to further build up in stocks on high production and weigh on prices that have fallen by more than a fifth since the start of 2012.
"We are in September and October - the peak of the production cycle for the year - so producers are willing to sell at lower prices," said Alan Lim Seong Chun, research analyst with Malaysia's Kenanga Investment Bank. "We have one more month to go in terms of high production. After that prices should be able to pick up."
The benchmark December contract on the Bursa Malaysia Derivatives Exchange slid 3.2 percent to close at 2,464 ringgit per tonne. It earlier tumbled as much as 3.8 percent to 2,449 ringgit ($800) per tonne - the lowest since July 2010. Total traded volumes on Monday were at 42,523 lots per 25 tonnes each, almost double the usual 25,000 lots as traders hedged positions and booked profits in the wake of a bearish technical outlook.
Reuters market analyst Wang Tao said technicals showed a break below 2,493 ringgit will lead to a further loss at 2,407 ringgit. "There is position squaring and continued speculative selling combined with seasonal production pressure which lingers in the market," said a trader with a local commodities brokerage. "Any attempt to rally will be capped by selling pressure at key chart resistance areas," he added.
Palm oil's demand-supply fundamentals looked weak. Palm oil exports in September were weaker-than-expected, slipping 0.7 percent to 1,443,836 tonnes compared to 1,453,544 tonnes in August, cargo surveyor Intertek Testing Services said on Monday. Another cargo surveyor, Societe Generale de Surveillance said exports inched up 0.5 percent to 1,433,795 tonnes compared with 1,427,052 tonnes shipped during August - a drop from its previous month-on-month 19.6 percent surge. Malaysia has been pushing out more crude palm oil shipments to curtail the rise in stocks that have hit a ten month high at 2.1 million tonnes. Industry analyst Dorab Mistry expects stocks to hit 3 million tonnes next year.
US soyaoil for December delivery eased 1.5 percent, giving up some of last session's gains even though the US Department of Agriculture report showed a smaller-than-expected drop in ending stocks. The Dalian Commodity Exchange was closed for the Golden Week holiday in China and will resume trading on October 8.