Malaysian palm oil futures dropped on Monday after a long weekend break, as losses in other vegetable oil markets during the Eid holiday and an export tax cut by Indonesia prompted traders to book profit. Last Friday, US soyoil lost 1 percent while the China soyaoil contract edged down 1.4 percent. Malaysian financial markets were closed for the Eidul-Azha holiday.
Selling pressure also mounted after the midday break on news that Indonesia, the world's top palm oil producer, would cut its palm export tax for November, a move that could hamper demand for Malaysian products. Indonesia will cut the export tax to 9 percent, down from 13.5 percent in October, and lower the export tax for refined palm olein to 3 percent in November from 6 percent in October. "Part of the fall is due to the market catching up after the holiday. The significantly lower export duty by Indonesia also put some pressure on prices," said a trader with a foreign commodities brokerage in Malaysia.
The benchmark January contract on the Bursa Malaysia Derivatives Exchange slid 2.4 percent to close at 2,540 ringgit ($831) per tonne. Total traded volumes stood at 36,345 lots of 25 tonnes each, higher than the usual 25,000 lots. Palm oil prices rose to a near 1-month high at 2,615 ringgit last Thursday, after cargo surveyors reported higher Malaysia's palm exports for October 1-25 compared to a month ago. Traders will be looking for more trading cues from the full-month exports figure for October on Wednesday. Technicals were bearish as a bullish target at 2,676 ringgit per tonne has been aborted, and a target at 2,379 ringgit has been established, said Reuters market analyst Wang Tao.
In other vegetable oil markets, US soyaoil for December delivery edged down 0.7 percent in late Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange closed 1.4 percent lower.