SINGAPORE, Aug 2: Malaysian crude palm oil fell on Thursday as wet weather forecast in the U.S. Midwest brought relief to drought-hit soy crop, temporarily easing concerns of a tightening oilseed supplies situation.
Investors were also left disappointed after the U.S. Federal Reserve dashed hopes of any fresh monetary stimulus, and are now looking ahead to the European Central Bank meeting later in the day for any major policy action.
‘The market is pretty much disappointed that so far there’s no promise coming from the Fed,’ said Ker Chung Yang, commodities analyst with Phillip Futures in Singapore.
‘Also, we have been talking about the U.S. Dry weather for so long. The weather effect is no longer a bull factor for oilseeds but when the weather changes it becomes a bear factor.’
By the midday break, the benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange had lost 0.7 percent to 2,924 ringgit ($936) per tonne. Prices earlier touched a low at 2,905 ringgit, a level last seen on July 27.
Traded volumes were thin at 10,375 lots of 25 tonnes each, compared to the usual 12,500 lots.
A better chance of rain was expected late this week in portions of the drought-stricken U.S. Midwest, bringing some relief to the struggling soybean crops, an agricultural meteorologist said on Wednesday.
Market players have been pricing in the damage done by the relentless drought on soybean crops in the United States that squeezed soybean oil supply.
A drop in soybean oil supply could shift more vegetable oil demand to the cheaper palm oil.
On the technicals front, palm oil is expected to drop to 2,880 ringgit, as indicated by a falling channel, Reuters market analyst Wang Tao said.
Market players are looking out for July stock figures in No.2 producer Malaysia, which could climb on slowing exports and better production.
Malaysian palm oil exports fell by 15 percent and 19 percent in July from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively.
Traders also remain watchful over the El Nino weather pattern which could return to Southeast Asia by end of the year as the adverse weather condition could hurt production for top producers Indonesia and Malaysia.
Brent crude steadied near $106 barrel on Thursday as investors looked to Europe for policy easing measures after the U.S. Federal Reserve dashed their hopes by deferring fresh monetary stimulus.
In other vegetable oil markets, by 0524 GMT, the most active U.S. Soyoil contract for December delivery had gained 0.6 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange had lost 1.2 percent.
(AGENCIES)
Trending Now
E-Paper
Follow our WhatsApp channel