Kuala Lumpur. Malaysian palm oil futures dropped on Monday as traders booked profit after pricing in firm exports and eyed growing concerns of a US debt default that might slow global economic growth and demand.
The palm oil market has been choppy in the past few days and could come under more pressure due to mounting worries about US debt.
The market has lost more than 18 percent so far this year on higher production in top suppliers Indonesia and Malaysia.
“There has been some selling pressure in commodity markets but not in a panic-stricken way as yet. Good exports should hold the palm oil market up temporarily,” said a trader with a foreign commodities brokerage. “Market players said that the weather is bringing bad yields, therefore production in July is down slightly,” said a trader in Kuala Lumpur.
The benchmark October crude palm oil contract KPOc3 on Bursa Malaysia Derivatives had fallen 1.3 percent, or 40 ringgit, to 3,100 ringgit ($1,042) per ton. Overall traded volume rose to 27,685 lots of 25 tons each from the usual 25,000 lots.
Cargo surveyor Intertek Testing Services signaled firmer demand for Malaysian palm oil, with data showing exports for July 1-25 rising 2.3 percent to 1.28 million tons from the same period a month ago.
Another surveyor, Societe Generale de Surveillance also showed exports up 5.7 percent during July 1-20. Robust demand comes as some traders and planters expect production next month to start slowing as mostly Muslim estate workers take leave for Ramadan, which starts in August. Grains and crude oil also fell on Monday over the prospect of a US debt default, adding pressure to the price of vegetable oils crushed from soybeans and also used in competing biodiesel.
Also, forecasts for rain this week in the heat-stricken US Midwest added to the selling momentum. US soy oil for August delivery BOc1 fell 0.8 percent in Asian trade hours.
source - www.dailymirror.lk
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