SINGAPORE, June 24: Malaysian palm oil futures fell to the lowest in more than a week on Monday as they tracked weaker soybean oil markets, but losses were limited by expectations of robust export data on Tuesday.
Soybean oil prices came under pressure as optimal crop weather in the U.S. Midwest raised prospects of higher soybean supplies. Palm oil tends to track soybean oil prices closely as the two are close substitutes.
But losses were trimmed by supportive export data for the June 1-20 period and expectations that the positive demand trend could continue on festive demand and a weak ringgit.
‘Prices are tracking losses in overseas soybean oil, but support should be at the 2,400 ringgit level. Fundamentals are still positive with exports going strong and the ringgit still weak,’ said a trader with a local commodities brokerage in Kuala Lumpur.
By the midday break, the benchmark September contract on the Bursa Malaysia Derivatives Exchange had lost 0.9 percent to 2,416 ringgit ($752) per tonne, slightly above its intraday low of 2,414 ringgit, a level last seen on June 14.
Total traded volumes were thin at 7,087 lots of 25 tonnes each, well below the usual 12,500 lots.
Traders are looking ahead to higher demand ahead of the Muslim holy month of Ramadan that begins in July. Consumption of the edible oil typically rises during the period as Muslims gather for communal feasts.
On top of that, a weaker ringgit against the dollar could spur more purchases of crude palm oil as it makes the feedstock cheaper for overseas buyers.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance will issue June 1-25 Malaysian palm oil exports on Tuesday. Export data for the June 1-20 period showed a monthly increase of as much as 16 percent.
Higher shipments and stagnant production growth would ease Malaysian palm oil stocks further in June after a decline to 1.82 million tonnes at end-May, the lowest in nearly a year.
Analysts feared palm oil harvesting in Malaysia could slow this month, as smoke from land-clearing fires in Indonesia pushed air pollution above hazardous levels in several parts of Johor.
‘We are also concerned that the severe haze may cripple palm oil supplies from estates engulfed by the haze … This may lead to lower palm oil supplies and higher prices in the medium term,’ Ivy Ng, an analyst with Malaysia’s CIMB Investment Bank, said in a note on Monday.
In other markets, Brent crude futures traded below $101 a barrel on Monday, hurt by a stronger dollar and concerns over slower growth in demand for oil in the United States and China.
In vegetable oil markets, U.S. Soyoil for July edged down 0.4 percent in early Asian trade. The most-active January soybean oil contract on the Dalian Commodities Exchange lost 1.7 percent.
(agencies)
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