27/01/2012 ((Reuters) - Malaysian crude palm oil dropped 1.2 percent on Thursday as traders booked profits on slowing export demand, with orders shifting to top producer and competitor Indonesia.

Palm oil bucked the trend in commodity markets -- from oil to soybeans -- that rose after the U.S. Federal Reserve said it would keep interest rates near zero until at least late 2014, providing ample liquidity to spur growth.

Palm oil investors instead focused on cargo surveyors reports of a decline of close to 17 percent to 19.9 percent in Malaysian exports from Jan. 1 to 25, with some saying orders had shifted to Indonesia, which offers cheaper cargoes thanks to lower export taxes.

"Things are not really looking up for Malaysian palm oil in January," said a Malaysian trader with a foreign commodities brokerage.

"There appears to be a shift in demand to Indonesia with the refiners there able to pass on the cost savings from lower export taxes to their offer prices."

Benchmark April palm oil futures on the Bursa Malaysia Derivatives Exchange dropped 1.2 percent to settle at 3,131 ringgit ($1,030)per tonne.

Traded volumes were thin after the long weekend holiday at 17,860 lots of 25 tonnes each, versus the usual 25,000 lots.

Technicals did not look promising. Reuters technical analyst Wang Tao said palm oil was expected to drop to 3,103 ringgit per tonne, with a downside potential at 3,049 ringgit.

Malaysia has to contend with declining margins as refined palm oil product prices are falling after Indonesia's massive export tax cut on processed edible oils triggered a ramp up in cargoes.

That has curtailed the export of Indonesian crude palm oil that Malaysia often takes up to supplement its smaller domestic supply. Cash prices reflect this, with Indonesia's crude palm oil just five percent cheaper than refined palm oil used in cooking oil.

Cargo surveyor Societe Generale said Malaysian palm oil exports for Jan. 1-25 dropped 19.9 percent to 947,401 tonnes from 1,182,707 tonnes shipped during Dec. 1-25 as countries like China and India cut back on orders.

Brent crude rose above $110 on Thursday, extending gains on hopes of demand growth revival after the U.S. Federal Reserve said it would keep interest rates low for much longer than previously planned to help speed economic recovery.

Higher crude oil supported prices of other vegetable oils that are increasingly getting channeled into the biodiesel sector.

The U.S. soyoil contract for March delivery rose 0.4 percent in Asian trade after posting gains in the previous session. China's commodity markets are closed for Lunar New Year this week. 
     
  Palm, soy and crude oil prices at 1004 GMT
                                                                      
  Contract                  Month    Last   Change     Low    High  Volume
  MY PALM OIL          FEB2    3138   -34.00    3138    3149     105
  MY PALM OIL          MAR2    3137   -34.00    3135    3161    3147
  MY PALM OIL          APR2    3131   -38.00    3127    3165    8510
  CHINA PALM OLEIN SEP2    8044   +84.00    7998    8056   49542
  CHINA SOYOIL         SEP2    9054  +116.00    8968    9068  205158
  CBOT SOY OIL        MAR2   51.60    +0.21   51.26   51.62    3124
  NYMEX CRUDE        MAR2  100.14    +0.74   99.44  100.24   14151
                                                                      
  Palm oil prices in Malaysian ringgit per tonne
  CBOT soy oil in U.S. cents per pound
  Dalian soy oil and RBD palm olein in Chinese yuan per tonne
  Crude in U.S. dollars per barrel