Malaysian palm oil prices sank to their lowest levels in almost five years on Tuesday as declining crude and soybean oil prices pushed them down. By Tuesday's close, the benchmark November contract on the Bursa Malaysia Derivatives Exchange had shed 1.05 percent to 2,066 ringgit ($655) per tonne, its lowest since October 2009. Total traded volume stood at 40,824 lots of 25 tonnes, above the daily traded average of 35,000 lots.
"The market is down and there was no impetus to move higher," said a trader with a foreign commodities brokerage in Kuala Lumpur, "although it is a little oversold." Weak crude, soybean and soybean oil prices had helped push palm prices to new lows after a lull in trading earlier in the day, he said.
Palm typically tracks soyoil, a rival edible oil and common food and fuel substitute. Soy markets are facing pressure over forecasts of a bountiful soybean crop from the United States, a top exporter. Palm oil prices failed to breach the 2,100 ringgit per tonne level during the day, which could have signalled that a bottom price had been reached, he said. "Then we'd see a proper retracement coming (and) whatever bearish elements (would) have already been factored into prices," he said.
Technicals showed a bearish target at 2,046 ringgit had resumed after palm pierced its August 18 low of 2,083 ringgit, said Reuters market analyst Wang Tao. In other markets, Brent crude oil prices on Tuesday were close to the 14-month lows reached the previous day as weak demand and improving supplies weighed on the market, although global political risk still provided some support. In competing vegetable oil markets, the US soyoil contract for December lost 0.72 percent in early Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange gained 0.1 percent.