Palm oil down, posts weekly loss
November 24, 2012
Malaysian palm oil futures fell for a fourth straight session on Friday and posted a third weekly loss in four, as investors remained concerned over slowing demand for the edible oil as prospects for global economic growth remained dim. Investors were also cautious ahead of a European meeting on Monday, when international lenders would gather for a second time to reach a deal to release emergency aid for Greece.
Malaysia, the world’s second largest palm oil producer, exported less of the edible oil for the first 20 days of the month compared to October, fuelling concerns over its inventories that have hovered near record high levels. “The market is still worried about exports, which slowed down due to the slew of holidays last week,” said a trader with a foreign commodities brokerage in Malaysia.
“The question everybody is asking now is whether end stocks will be lower or slightly higher. I think it should be going down with lower production.” The benchmark February contract on the Bursa Malaysia Derivatives Exchange lost 0.7 percent to close at 2,395 ringgit ($783) per tonne. Total traded volumes stood at 32,946 lots of 25 tonnes each, higher than the usual 25,000 lots.
Technicals showed a bearish target at 2,321 ringgit remains intact for palm oil based on a Fibonacci retracement analysis, said Reuters market analyst Wang Tao. For the week, futures lost 1.4 percent on worries that the US budget crisis, and the euro zone’s ongoing financial woes, could weigh on demand. Malaysian shipments of the tropical oil fell 3.3 percent and 3.8 percent for the November 1-20 period from a month ago, cargo surveyors Intertek Testing Services and Societe Generale de Surveillance said respectively.
Traders are hoping the annual price outlook conference, organised by the Indonesia Palm Oil Association on next Thursday and Friday, would provide more perspective. In other vegetable oil markets, the most active May 2013 soyabean oil contract on the Dalian Commodity Exchange closed 0.2 percent higher. The US financial markets were closed for the Thanksgiving holiday.