Malaysian palm oil futures edged down to a two-week low on Thursday, as data showed stockpiles in the world's No 2 producer remained high and on improving weather in key soy-growing regions in South America. Better South American weather would contribute to an expected bumper crop in Brazil, poised to overtake the United States as the No 1 soyabean grower, adding pressure to the soybean market tracked by palm oil.
January's palm oil end-stocks eased off record levels and fell to 2.58 million tonnes, according to industry regulator data, but the smaller-than-expected decline triggered some selling pressure in the market. "While good export news continues to come in, nervousness about the large South American crop (and its effect on prices), as well as the US soybean market facing a seasonal slowdown are pressuring the futures market," said a trader with a local commodities brokerage in Malaysia.
The benchmark April contract on the Bursa Malaysia Derivatives Exchange had edged down 0.3 percent to close at 2,497 ringgit ($811) per tonne. Prices went as low as 2,490 ringgit, the lowest level since January 30. Total traded volumes stood at 20,263 lots of 25 tonnes each, slightly lower than the average of 25,000 tonnes. Technical analysis showed palm oil is expected to drop further to 2,460 ringgit per tonne, as it has fallen below support at 2,510 ringgit, said Reuters market analyst Wang Tao.
Cargo surveyor data showed Malaysia's exports of palm oil products rose as much as 25 percent in the first 10 days of February on stronger demand from major buyers India, China, the United States and Europe. Traders will be looking out for February 1-15 export data on Friday to further gauge demand trend of the tropical oil. India's vegetable oil imports soared 27.4 percent from a month earlier to hit an all-time high in January on record purchases of cheap palm oil from south-east Asia, a trade body said on Thursday, despite a hike in import duties mid-month. In competing vegetable oil markets, US soyaoil for March delivery dropped 0.3 percent in late Asian trade. The Dalian Commodity Exchange is closed for the Lunar New Year holidays and will resume trading on Monday.