Published: Thursday September 20, 2012 MYT 2:32:00 PM
Palm oil futures edge down, exports cap losses
KUALA LUMPUR: Malaysian palm oil futures fell on Thursday as fresh signs emerged of an economic slowdown in China, the world's second biggest edible oils buyer, while news of better-than-expected soy yields in the United States continued to drag down prices. Inventory levels that could surpass 2.2 million tonnes in September threatened to offset strong exports. Cargo surveyor Intertek Testing said export shipments rose almost 15 percent during Sept. 1-20 over the same period a month ago. Futures traded in a tight range between 2,841 and 2,871 ringgit, as investor sentiment remained bearish. Prices fell to a one-week low on Tuesday, tracking soybeans lower on expectations for crop yields across the drought-stricken U.S. Midwest to exceed forecasts. Also weighing on prices was data that showed manufacturing in China contracted for the 11th month in a row in September, indicating the world's second largest economy remains on track for a seventh quarter of slowing growth. "The market is trying to hold. It's very difficult for the market to go up because the cash market is quite weak," said a trader with a foreign commodities brokerage in Malaysia.
"Compared to last month, exports should be better. But the major thing is the stocks have to go down for the market to move higher," the trader said. Another cargo surveyor, Societe Generale de Surveillance, will issue export data later in the day. By the midday break, the benchmark December contract on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,854 ($930) per tonne. Total traded volume stood at 13,710 lots of 25 tonnes each, slightly higher than the usual 12,500 tonnes.
In a bearish sign for palm oil, Brent crude eased below $108 a barrel on Thursday after the China data weakened sentiment further in a market already reeling from Saudi Arabia's pledge to keep global crude oil prices low. In other vegetable oil markets, U.S. soyoil for December delivery dropped 0.6 percent. The most active January 2013 soyoil contract on the Dalian Commodity Exchange rose 0.3 percent by the midday break. - Reuters