Euro Debt Woes Drag Palm Oil To Near 8-Month Low
28/06/2011 (Business Recorder) - Malaysian palm oil fell to a near eight-month low on Monday, as traders scaled back ahead of a Greek vote on unpopular austerity measures that raises questions about Europe's financial health and global economic growth.
Palm oil notched losses for a fourth day as market sentiment also got dampened by growing stocks in Malaysia -- the world's No.2 producer of the vegetable oil -- even though a cargo surveyor reported a strong showing in export demand.
"The global market is very weak, even if we had a strong exports data it couldn't neutralise the losses," said a trader with foreign brokerage in Kuala Lumpur.
By midday, benchmark September crude palm oil contract on BursaMalaysia derivatives fell 0.8 percent to 3,092 ringgit ($1,017) after touching its lowest level of 3,085 ringgit, unseen since Nov 3 last year.
Overall traded volume stood at 12,980 lots of 25 tonnes each, above the usual 12,500 lots.
Exports of Malaysian palm oil products for June 1-25 rose 17.3 percent to 1,252,780 tonnes from a month ago, cargo surveyor Intertek Testing Services said on Saturday.
Another surveyor Societe Generale de Surveillance is expected to unveil Malaysian export data during the same period later in the day.
The strong demand may still not be enough to cut into Malaysia's growing stocks, which are likely to surpass 2 million tonnes this month on strong output as well as imports from Indonesia.
Other vegetable oils dropped in Asian hours as commodity and financial investors across the board scaled back ahead of the Greek vote on the fiscal measures due this week.
US soyoil for July delivery fell 1 percent on Monday and the most active January 2012 soyoil lost almost 2 percent.
"The unstable global economic is a chain effect, limiting gains in China soyoil market," said Zhang Juan Cong, an oil analyst with Dadi Futures in China's southern city of Hangzhou.
"Weather conditions for US soybean planting area in July and August are crucial to set market prices as this will determine the global supply scenario," he added.