KUALA LUMPUR, Aug 17: Malaysian palm oil futures closed marginally lower on Friday as players picked up bargains, helping the market cut heavy losses suffered in the morning session due to credit tensions.

But traders expect prices to go lower next week as more speculative players scramble out of the palm oil market on fears of a renewed assault on global markets.

The benchmark November contract on the Bursa Malaysia Derivatives Exchange ended down 11 ringgit at 2,378 ringgit ($677) per ton, after diving as low as 2,314 ringgit.

Palm oil is more of a bargain at these levels, so buying interest is quite high, said one trader.

But the question is whether long-term demand for palm oil in the food and biofuel sector is going to be impacted as the problems with the global markets might signal a slowdown in world economic growth. Other traded months fell between 7 and 23 ringgit, except for the September contract, which was up 11 ringgit. Overall volume that nearly doubled to 23,020 lots of 25 tons each from around 12,000 lots traded on a routine day.

Fears of a credit squeeze have kept equity markets around the world under pressure since the end of July, and those worries have started to have a significant impact on commodity markets, which until recently were relatively firm.

The only positive factor from the problems in the global markets is that the ringgit has depreciated, making palm oil prices a little more easier to take for importers in China and India, said another trader.

Asian vegetable oil demand has continued to grow from July as buyers across Asia locked in supplies for the festival season, especially for the holy month of Ramazan and the Chinese mid-Autumn festival, both due in September. But other traders said palm oil’s slide was first triggered when Dorab Mistry, an influential industry analyst, told Reuters in an interview on Monday that high prices could cut Indian import demand sharply from earlier estimates.

Mistry’s comments were the reason that players needed to get out of the palm oil market quickly as the problems in the equity and credit markets became more severe, said another dealer.

Palm oil, used in products ranging from confectionaries and cosmetics to biofuels, has lost 6 per cent since Mistry’s comments on Monday.—Reuters