SINGAPORE: Malaysian palm oil futures fell on Monday on weaker exports, although losses were limited as a last-ditch deal to bailout Cyprus supported investor appetite for riskier assets.
Cyprus clinched a deal with international lenders for a 10 billion euro bailout, sending global markets including crude oil and the euro higher.
But palm oil came under pressure as Malaysian exports fell to 1.06 million tonnes in the first 25 days of the month, a 7 per cent slide compared to the same period last month.
Data from cargo surveyors also showed a slowdown of shipments to major edible oil buyers India, the US and the European Union.
“We saw a drop in exports to India … Indian buyers last month did not book that many shipments for March in advance on uncertainty of the tax change,” said a Singapore-based trader with a global commodities house.
Indian buyers avoided booking cargoes for March in advance as they expected the government to use its budget in late February to announce a hike in import tariffs, although that did not materialise.
The benchmark June contract on the Bursa Malaysia Derivatives Exchange had lost 1.3 per cent to RM2,460 per tonne by Monday’s close. Intraday prices touched a high of RM2,505, the highest level since February 22, but failed to rally.
Total traded volume stood at 35,577 lots of 25 tonnes each, much higher than the usual 25,000 lots.
Leading analyst Dorab Mistry has forecast palm oil futures could trade between RM2,400 and RM2,700 per tonne by the end of May due to lower stocks and output, an upward revision from his previous forecast.
He also expects Malaysian palm oil stocks to drop below 2 million tonnes in June.
“We generally agree with Dorab Mistry’s short-term view … However, we do not think Malaysia palm oil inventory will reach 2 million tonnes as we believe it should reach the lowest level of 2.27 million tonnes by April 2013,” Alan Lim Seong Chun, research analyst with Malaysia’s Kenanga Investment Bank, said in a note to clients.
Palm oil stocks in Malaysia, the world’s second-largest palm producer, stood at 2.44 million tonnes in end-February and traders are counting on seasonally slower production and healthy demand to bring stocks down.
In other markets, Brent rose above US$108 on Monday, as hopes brightened for a revival in demand after euro zone ministers approved an EU-IMF plan for restructuring Cyprus’s banking sector, averting a worsening crisis for the region.
In other vegetable oil markets, US soyoil for May delivery edged down 0.3 per cent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange fell 0.2 per cent.– Reuters
Source : Business Times