SINGAPORE, Sept 21: Malaysian palm oil futures dropped on Friday to their lowest in more than 11 months, posting their worst week since March last year as rising inventories and overnight losses in U.S. soybeans weighed on prices.
The brisk pace of the U.S. soybean harvest and global economic concerns dragged down palm oil prices, which have already come under pressure due to worries inventory levels in key producer Malaysia could climb above 2.2 million tons in September, which would be the highest level seen this year.
“The overseas market was down yesterday and this morning the Dalian market was down, so the futures market is under tremendous pressure on long liquidation and speculative short-selling,” said a trader with a foreign commodities brokerage in Malaysia.
“Technicals also don’t look good as prices broke below 2,800 ringgit with immediate support at 2,754 ringgit.”
At the close, the benchmark December contract on the Bursa Malaysia Derivatives Exchange had lost 2 per cent to 2,763 ringgit ($905) per ton, slightly above the intraday low at 2,755 ringgit, a level unseen since Oct. 6.
The prices broke below the 2,800-ringgit mark for the first time this year and posted a 5.9 per cent loss this week.
Total traded volume stood at 37,030 lots of 25 tons each, much higher than the usual 25,000 tons. Technicals continued to look bearish with Reuters market analyst Wang Tao saying palm oil would keep falling to 2,719 ringgit per ton based on a wave analysis.
Latest cargo surveyor data pointed to rising exports but traders said the increase was not enough to offset strong production, which could push September stocks even higher than the 10-month high of 2.1 million tons seen in August.—Reuters
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