JAKARTA, Aug 4:Malaysian crude palm oil futures fell about 2 per cent on Monday, following a slide in soyaoil prices, a drop in crude oil, and worries about a build-up in palm oil supplies, dealers said.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange closed down 60 ringgit at 2,890 ringgit ($885) a ton, after trading as low as 2,820 ringgit, a level not seen since October 31, 2007.
We don’t see any good support for the market. Soyoil is down, crude oil is down, and the fundamentals are weak, said a dealer in a local brokerage firm.
Malaysia and Indonesia, the world’s top palm oil producers, are in a high production cycle, and analysts predict a bumper harvest to last until September.
Dealers said stocks at the end of July probably stood at above 2 million tons, as demand was not yet sufficient to soak up supply.
US weather in August is key to soybeans, as it is the time when the plants set pods that determine yield and production.
Cargo surveyor Intertek Testing Services reported exports of Malaysian palm oil products for July rose 27 per cent to 1,378,537 tons from the previous month, showing demand started to trickle in.
Indonesian palm oil also fell, tracking the weaker Malaysianmarket, but healthy demand from local refiners curbed the decline.
Crude palm oil prices at the state marketing centre’s auction in Jakarta fell nearly 3 per cent to 7,503 rupiah ($0.825) a kg, from 7,729 rupiah a kg on Friday, FOB Belawan port in Sumatra.
The price was above the centre’s offer price of 7,491 rupiah a kg. Vegetable oils markets fell sharply today. But local demand remains good, said an auction official at the centre, which sells palm oil from state plantations.
Palm oil producers in North Sumatra’s Medan — home to Belawan port, which is the key port for palm oil exports — did not hold any auction.
Refiners in Jakarta offered RBD palm olein, used as cooking oil, at 8,100 rupiah, down from 8,300 rupiah a kg on Friday.
In Malaysia’s physical market, August crude palm oil was offered at 2,900/2,910 ringgit in the southern region. Trades were done at 2,870-2,900.—Reuters