January 12, 2013
Malaysian palm oil futures slid to a 3-week low on Friday, posting their steepest weekly loss since mid-November, as higher stocks and slowing exports weighed on investors’ confidence. Malaysia’s palm oil stocks climbed to a record 2.63 million tonnes in December, going against market consensus of a slight drop and fuelling concerns that inventory levels may remain high for the first month of the year.
For the week, palm oil futures lost 4.1 percent, weakened by data showing exports for the first ten days of January falling by as much as 34 percent from the same period a month ago amid China’s stricter regulation on edible oil imports. “Overall, we view the latest inventory data negatively as high stocks should keep prices at distressed level of below 2,500 ringgit per tonne for an extended period,” Alan Lim Seong Chun, research analyst with Malaysia’s Kenanga Investment Bank, said in a note on Friday.
The benchmark March contract on the Bursa Malaysia Derivatives Exchange lost 0.9 percent to close at 2,366 ringgit ($784) per tonne, above its intraday low at 2,332 ringgit, a level not seen since December 21. Total traded volume stood at 42,283 lots of 25 tonnes each, higher than the usual 25,000 lots. Technicals showed palm oil was expected to fall to 2,334 ringgit per tonne, with a good chance of breaking below this level and heading to 2,289 ringgit, said Reuters market analyst Wang Tao.
Malaysian palm oil exports fell 25 percent and 34 percent for the first 10 days of January from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance, respectively. “A steep decline in export taxes from 23 percent to zero should have some positive impact on shipment. We should see the effects in one or two months,” Alvin Tai, plantations analyst with Malaysia’s OSK Research, said in a note on Friday.
In competing vegetable oil markets, US soyaoil for March delivery lost 0.5 percent in late Asian trade, as investors stayed on the sidelines ahead of a US Department of Agriculture supply-demand report due to be released later on Friday. The most active May soybean oil contract on the Dalian Commodity Exchange closed 1.6 percent lower.