KUALA LUMPUR, Oct 5: Malaysian crude palm oil futures, which have been declining this week on weakness in rival soyaoil, are unlikely to bounce back soon, industry analyst Dorab Mistry said.
It may not bounce back immediately. All markets are heavily overbought, very heavily speculatively overbought, Mistry told Reuters.
Palm a little less, soy much more. So as a result there may be a little bit of further correction and I would not be surprised. Malaysian palm oil futures have lost 4 per cent since Monday, tracking to a sell-off in soybean oil and crude oil markets.
The benchmark December contract on the Bursa Malaysia Derivatives Exchange settled down 24 ringgit, or 0.9 per cent, at 2,545 ringgit ($746) a ton, after dipping as low as 2,530 ringgit. The market opened 5 ringgit lower on Thursday.
The market has been coming off because of world factors, gold has come off, the main problem was in wheat which has gone up too much, Mistry said in a telephone interview late on Wednesday.
But Chicago Board of Trade wheat futures recovered, rising 2.2 per cent on Thursday on improved expectations for the export market and lingering global supply concerns.
Palm oil exports from Malaysia have peaked in September and are expected to decline in the coming months, said Mistry, a director with Godrej International Ltd.
We have seen peak exports in September, October will be slightly lower than September, he said.
We will see a stock build in November and we should be mentally prepared to see stocks go to 1.7 million tons. Mistry said Indian vegetable oil imports are likely to be subdued in coming weeks because of good domestic supplies.—Reuters
