Palm oil tumbles to 1-mth low, tracking losses in soybean

KUALA LUMPUR, Sept 18: Malaysian crude palm oil futures fell to a one-month low on Tuesday, tracking losses in soybean futures, which had posted their biggest daily drop in a year on a better-than-expected harvest in the U.S.  Midwest.
Palm oil futures lost as much as 4.2 percent after resuming trading following a holiday break, as signs of better soybean yields in the U.S. Midwest and favourable crop weather in Brazil brightened global oilseed supply  prospects.
‘It’s purely because of the grains complex. People are cashing out on the weather, so that triggered a lot of short orders, especially on the U.S. Side,’ said a trader with a foreign commodities brokerage.
‘The palm oil market is under tremendous pressure.’
By the midday break, the benchmark December 2012 contract on the Bursa Malaysia Derivatives Exchange slid 125 ringgit to as low as 2,861 ringgit ($936), a level last seen on Aug.  15.
Total traded volume stood at 22,670 lots of 25 tonnes each, much higher than the usual 12,500 tonnes, as traders hedged positions and booked profits.
Technicals showed palm oil will drop to 2,859 ringgit per tonne, but could travel further down to 2,719 ringgit in the next few trading sessions. It would not be a surprise if palm oil reached 2,832 ringgit on Tuesday, Reuters market analyst Wang Tao said.
Brent crude, which fell more than $5 a barrel late Monday in a wave of late, high-volume selling, also dragged down palm oil prices, analysts said.
‘I think this is in line with the global commodities sell-off,’ said Kenanga Investment’s analyst Alan Lim Seong  Chun.
‘Because crude oil is the most representative of all the major assets in the commodities, I think sentiment for palm oil is very negative because of crude oil,’ he added.
In a bullish sign for palm oil, Brent crude rose to near $114 a barrel on Tuesday, after steep losses in the previous session, but gains were limited as investors weighed the impact of the Federal Reserve’s stimulus push on oil demand and eyed China’s next step to boost its economy.
In other vegetable oil markets, U.S. Soyoil for December delivery fell 0.1 percent by 0522 GMT. The most active January 2013 soyoil contract on the Dalian Commodity Exchange was trading 2.3 percent lower by the midday break.
(agencies)

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