Malaysian crude palm oil futures dropped 3.1 per cent to the lowest level in nearly six weeks yesterday, extending a losing streak to five straight sessions amid worries over rising output, traders said.
Improved rainfall in palm-growing areas raised the prospect of higher output, setting a negative tone for prices, which have come under pressure after cargo surveyors reported last week that Malaysia August exports dropped to about 1.3 million tonnes from 1.4 shipped in July.
“There is no more weather factor,” said a trader with a Kuala Lumpur-based commodities bro-kerage, adding that bearish external markets and poor export numbers may bring down the palm price to its next support level of RM2,060.
Another Malaysian trader said the market also took its cue from weakness on China’s Dalian Commodity Exchange, with the most-active September soyaoil contract falling 5.5 per cent.
Some analysts, however, said palm prices may get support from the return of an El Nino drier weather pattern.
Thomas Mielke, head of German oilseeds research group Oilworld, said Malaysian palm oil futures, which often draw strength from the US soyabean market, may be well supported by low stocks of the tropical oil and dry weather hitting yields.
“There are low stocks of palm oil and production has suffered – as a result, world supply of palm oil will show below-average growth in 2009/10,” Mielke said at a grains conference in the Philippines.
The benchmark November contract on the Bursa Malaysia Derivative Exchange settled down RM67 at RM2,130 a tonne, a level unseen since July 29. – Reuters Source : Business Times