Palm oil plunges to 3-month low, Greek turmoil weighs
SINGAPORE, May 14 — Malaysian palm oil futures suffered their sharpest fall in more than a year today, closing at a three-month low as failed talks to form a new Greek government heightened fears about the euro zone’s debt crisis.
Market sentiment was bearish as talks to form a coalition government in Greece stalled, pushing the debt-laden country closer to bankruptcy and a possible exit from the euro zone.
“Political uncertainty in euro zone and a gloomy global economic outlook weighed on the market. Weakness in Malaysian palm overnight is also a factor,” said a trader with a local commodities brokerage in Malaysia, referring to palm oil futures that slipped to a nine-week low on Friday.
Benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange lost 3.8 per cent to close at RM3,150 per tonne, the worst single-day loss since February last year, when prices dropped more than four per cent.
Palm oil closed at its weakest since ending at RM3,168 on February 13 this year.
“Some emotional loss-cutting and headline-driven sell down were going on. Fundamentals are actually not so bad ... the sell down was grossly overdone and a rebound is expected soon,” said another dealer with a foreign commodities brokerage in Malaysia.
Traded volumes stood at 40,345 lots of 25 tonnes each, much higher than the usual 25,000 lots as traders were eager to cut losses.
Palm oil seems to be heading towards RM3,136 as it has broken a support level at RM3,208 per tonne, said Reuters market analyst Wang Tao based on technical analysis.
Malaysian palm oil exports for the first 10 days of May fell six per cent and 14.2 per cent from a month ago, according to cargo surveyors Intertek Testing Services and Societe Generale de Surveillance respectively.
Traders will be looking out for export numbers for the first half of the month due tomorrow to gauge demand trend for the edible oil.
Market players expected a recovery in export numbers after the fall in the first 10 days but said that it may not lift palm oil prices by much in a volatile global market.
Malaysia’s April palm oil stock level fell 5.4 per cent to 1.85 million tonnes from a month ago, according to industry regulator Malaysian Palm Oil Board.
Oil fell sharply today, as mounting political uncertainty in Greece and worry about the prospects for growth in China added to a sense that the demand outlook is worsening.
In other vegetable oil markets, the most active US soyoil contract for July slipped two per cent in late Asian trade while the most active Dalian soyoil September contract traded 2.6 per cent lower.
“Earlier positive news of lower soybean production from South America has already been priced in, so the Dalian market is now tracking CBOT (US Chicago Board of Trade). If prices continue to fall for the next two days, we will soon see a rebound,” said Huang Zhi Qiang, an analyst with Guotai Junan Futures in Shanghai. — Reuters