SINGAPORE, Oct 29: Malaysian palm oil futures tumbled on Monday after a long weekend break, as losses in other vegetable oil markets during the holiday prompted traders to cut their positions and book profit.
Last Friday, U.S. Soyoil lost 1 percent while China soyoil contact edged down 1.4 percent. Malaysian financial markets were closed for the Eid al-Adha holiday.
‘Soybean oil was down during the holiday, so people are taking profit. The rally has been building for too long,’ said a trader with a foreign commodities brokerage in Malaysia.
‘We have good export figures in October, the important thing is how this will affect end-stocks. The market is also pricing in Indonesia cutting their exports duty in November,’ the trader added.
By the midday break, the benchmark January contract on the Bursa Malaysia Derivatives Exchange lost 2.2 percent to 2,547 ringgit ($835) per tonne. Total traded volumes stood at 12,500 lots of 25 tonnes each.
Palm oil prices rose to a near 1-month high at 2,615 ringgit on Thursday, after cargo surveyors reported higher Malaysia’s Oct. 1-25 palm exports compared to a month ago.
Traders will be looking for more trading clues from the full-month exports figure for October on Wednesday.
Indonesia, the world’s top palm oil producer, may cut its export tax for crude palm oil to 10.5 percent for November, from 13.5 percent for October, an industry group said last week.
A lower tax for Indonesian crude palm oil, making it cheaper for overseas buyers and refiners, could hamper demand for Malaysian palm oil and weigh on futures.
Technicals were bearish as a bullish target at 2,676 ringgit per tonne has been aborted, and a target at 2,379 ringgit has been established, said Reuters market analyst Wang Tao.
Brent oil slipped on Monday, as refineries along the U.S. East Coast lowered run rates ahead of approaching Hurricane Sandy, reducing crude use in the world’s largest oil consumer.
In other vegetable oil markets, U.S. Soyoil for December delivery edged down 0.5 percent in early Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange dropped 1.1 percent by the midday break.
(agencies)
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