KUALA LUMPUR, Dec 1: Malaysian palm oil futures edged lower on Monday as sharp declines in crude oil markets offset fears that heavy rainfall and floods in key producing areas would hit output.
Talk of a possible slowdown in production as wet weather discourages harvesting could in the coming days support prices of palm oil, which are down nearly two-thirds from a record high of 4,486 ringgit per ton in March as the global financial crisis roils commodity markets.
Sabah and Sarawak states on Borneo island, which account for 45 per cent of the Southeast Asian nation’s total palm oil output, are experiencing heavy rainfall and some flooding.
Benchmark February palm oil contract on the Bursa Malaysia’s Derivatives Exchange settled down 4 ringgit at 1,628 ringgit ($449.6) per ton after going as high as 1,675 ringgit.
Overall trade rose to 13,054 lots of 25 tons each from 10,000 lots.
There will be volatility in crude oil this month with pressure on the western countries to provide more rate cuts and palm oil is bound to be affected somewhat, said a trader.
Palm oil tends to track crude oil moves as rival vegetable oils such as rapeseed and soyaoil are increasingly used as a feedstock for biodiesel.
Exports of Malaysian palm oil products for November rose 0.8 per cent to 1,328,748 tons from 1,318,196 tons shipped in October, cargo surveyor Intertek Testing Services said on Monday, in line with market expectations.
Indonesia, the world’s largest palm producer, the state marketing centre in Jakarta did not sell any of 8,000 tons of crude palm oil offered in an auction on Monday due to low bids.
Producers in Medan -- home to Belawan port, Indonesia’s key port for palm oil exports -- did not hold any palm oil auctions on Monday, as they waited for price leads from a palm oil conference in Indonesia’s resort island of Bali on Wednesday.
Refiners in Jakarta sold refined, bleached, deodorised (RBD) palm oil used as cooking oil at 6,500-6,550 rupiah ($0.544) a kg, unchanged from Friday due to lacklustre demand.
In Malaysia’s physical market, crude palm oil for both December and January shipments in the southern regions saw bids and offers at 1,600/1,615 ringgit. Trades were done between 1,610 and 1,620 ringgit.—Reuters