KUALA LUMPUR, Oct 30: Palm oil futures fell to a near 2-week low on Tuesday as investors feared lower November export taxes in top producer Indonesia could shift demand away from competitor Malaysia while fretting over a slowing global economy.
Prices of the edible oil also came under pressure from weaker Brent crude as Sandy, one of the worst storms to hit the US in years, shuttered the US refineries, curbing energy demand in the world’s largest economy and weighing on other commodity markets. “At the moment, we don’t see any supportive news for palm oil. Prices are likely to stay choppy in a range of 2,430 to 2,600 ringgit,” said Phillip Futures analyst Ker Chung Yang in Singapore.
“The tax cut will hurt Malaysia’s palm oil prices as Indonesia’s palm oil becomes more competitive in the near future. Malaysian players will certainly hope that the government will do more to counter such an act from Indonesia.” The benchmark January contract on the Bursa Malaysia Derivatives Exchange slid 1.8 per cent to 2,501 ringgit ($820) per ton after dropping as low as 2,491 ringgit, a level unseen since Oct 18.
Total traded volumes stood at 33,602 lots of 25 tons each, higher than the usual 25,000 lots. Palm oil prices may still target 2,379 ringgit per ton, as a rebound from the Oct 3 low of 2,230 ringgit has been completed and a preceding downtrend has resumed, said Reuters market analyst Wang Tao.
Brent crude hovered above $109 a barrel on Tuesday due to the storm, and analysts expect weaker crude oil to weigh on the whole commodities asset class. In other vegetable oil markets, the US soyoil for December delivery inched up 0.2 per cent in early Asian trade. The most-active May 2013 soybean oil contract on the Dalian Commodity Exchange fell 0.3 per cent. —Reuters