KUALA LUMPUR: Malaysian palm oil futures tumbled in early trade today, as worries over soft demand leading to high stockpiles in December lingered while weakness in rival oils compounded the bleak picture.
The benchmark palm oil contract for March delivery on the Bursa Malaysia Derivatives Exchange dropped 1.32% to RM2,466 a tonne at the midday break, and looked set for a third straight session of falls.
Trading volumes stood at 16,130 lots of 25 tonnes each.
“Demand has not been promising. The market is closely watching how exports will turn out (this month),” a Kuala Lumpur-based trader said, noting that stocks could rise for another month.
Malaysian palm oil shipments fell 2% on Dec 1-20 compared with the same period last month, data from cargo surveyor Intertek Testing Services showed.
Inventory levels in Malaysia rose to their highest in nearly two years, by 16% to 2.56 million tonnes, while exports for November fell 11.9% on-month, data from the Malaysian Palm Oil Board last week showed.
Another trader said weakness in rival vegetable oils has exerted further pressure on palm, but the market could be slightly relieved by bargain hunters.
“Overall the market lacked positive news. Bargain buyers could come in and there could be buying for a year-end rally,” the trader said.
In other related edible oils, the January soybean oil contract on the Chicago Board of Trade slid 0.4%, while the May soybean oil contract on the Dalian Commodity Exchange was down 1.3%.
The Dalian January palm olein contract fell 1.6%.
Palm oil prices are impacted by movements in other edible oils, as they compete for a share of the global vegetable oils market. – Reuters
Source: The Sun Daily