Malaysian palm oil futures fell for a third straight day on Wednesday as technical selling and a stronger ringgit weighed on prices, but steady demand for the tropical oil limited the losses. Cargo surveyor Intertek Testing Services showed exports of Malaysian palm oil in November 1-20 slipped 2.1 percent to 1,004,880 tonnes compared with volumes shipped a month ago, as purchases from India and China cooled. However, traders said the decline had already been factored into the prices. “Overall, the market is still looking tower, but it may pull up a bit to 2,575 ringgit for a minor correction,” said a trader with a local commodities brokerage.
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had edged down 0.2 percent to 2,552 ringgit ($802) per tonne. Prices were chopppy and traded between 2,545-2,565 ringgit. Total traded volume stood at only 8,815 lots of 25 tonnes each compared with the average 12,500 lots.
Technicals showed a bearish target at 2,506 ringgit per tonne remains unchanged for Malaysian palm oil, driven by a downward wave c, said Reuters market analyst Wang Tao. Palm oil demand typically loses steam in the last quarter of the year as countries in the northern hemisphere turn colder – the tropical oil solidifies in winter, making it a less attractive option compared to other competing edible oils such as soyoil.
While market players say the world’s second-largest palm oil buyer China will still import palm ahead of its January Lunar New Year festival, investors are wary that Chinese buyers might have booked shipments in September when prices were trading around 2,300 ringgit. In competing vegetable oil markets, the US soyoil contract for December rose 0.4 percent in early Asian trade. The most active May soybean oil contract on the Dalian Commodities Exchange fell 0.3 percent.