SINGAPORE, Nov 28: Malaysian palm oil futures eased on Wednesday, dropping for a second straight session on concerns the U.S. Fiscal woes could hamper global economic growth and commodity demand.
Prices touched their highest in almost one week on Tuesday as a Greek debt deal provided brief comfort for investors, but the lack of progress in U.S. Budget talks and speculation that Malaysian palm oil inventory level could hit a record high this month kept prices in a tight range.
‘The market looks like it’s expected to just stay rangebound this week,’ said a Singapore-based trader with a global commodities trading house. ‘But for the longer term, sentiment has improved compared to a month ago.’
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange fell 0.3 percent to 2,404 ringgit ($788) per tonne. Prices traded in a tight range of 2,396 to 2,417 ringgit.
Total traded volumes stood at 18,618 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technicals showed mixed signals for palm oil, but it is biased to drop to 2,353 ringgit per tonne, said Reuters market analyst Wang Tao.
Malaysian palm oil stocks hit a record high in October at 2.51 million tonnes on seasonally high production. While some traders said a slower output this month may ease pressure on stockbuild, concerns remained that export demand may not be enough to bring stocks down.
Cargo surveyors showed a slight drop in shipments in the first 25 days of November from a month ago.
The European Commission has made public a decision taken last week to allow palm oil producers under the Roundtable on Sustainable Palm Oil scheme to qualify for biofuel subsidies, a move that could spur more European demand for the tropical oil.
In other markets, Brent crude edged above $110 per barrel after dropping to a one-week low in the previous session, although gains were capped as investors nervously eyed talks to head off a looming fiscal disaster in the United States, the world’s top oil consumer.
The U.S. Budget woes also weighed on other vegetable oil markets. U.S. Soyoil for December delivery fell 0.7 percent in early trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange edged 0.3 percent lower.
The market also took note of Olam International’s detailed defence on Wednesday against short-seller Muddy Waters’ attacks on its accounting practices and acquisitions, emphasising it was not at risk of insolvency.
Shares of the Singapore commodities firm tumbled as much as 6 percent to a three-and-a-half year low, but later recouped some losses.
(agencies)
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