KUALA LUMPUR, Aug 13: Malaysian crude palm oil futures edged lower on Wednesday after rising as much as 3.3 percent as a looming stock build-up offset the influence of technical rebounds in crude oil markets on vegetable oils.
Palm oil prices, which have slid more than 16 per cent this year and are down more than 43 percent from their March peak, could drop further as rising exports are not quite enough to soak up palm stocks.
The benchmark October contract on the Bursa MalaysiaDerivatives Exchange settled down 13 ringgit at 2,548 ringgit ($768) per ton after going as high as 2,646 ringgit per ton.
Apart from a technical recovery, there is nothing much to keep the market up as the USDA report for soybeans was within expectations and Malaysian palm stocks will not be heading lower as we approach the peak production season in August, a trader with a local brokerage said.
Other traded months fell between 11 and 20 ringgit while the March 2009 contract edged higher and January 2010 remained unchanged. Overall trade rose to 15,949 lots of 25 tons each.
Malaysia’s crude palm oil stocks fell 2.8 per cent to 1,977,060 tons in July, more than a fall of 2.2 per cent estimated in a Reuters poll, but still remained near record levels.
Oil firmed ahead of US weekly oil data, which is expected to show drops in crude and gasoline inventories.
Indonesian crude palm oil prices eased, dragged down by Malaysian market with players waiting to see whether prices would fall further.
Malaysian market is still weak but local demand is still good. Buyers desperately need cargoes to meet contract for prompt shipment, said an official at the centre, adding that buyers paid higher than the centre’s offering price of 6,805 rupiah a kg.
Palm oil producers in North Sumatra’s Medan — home to Belawan port, which is the key port for palm oil exports — offered crude palm oil unchanged from previous day at 6,740-6,850 rupiah a kg.
In Malaysia’s physical market, August crude palm oil was offered at 2,570/2,600 ringgit in the southern region. Trades were done between 2,600 and 2,650 ringgit.—Reuters