Malaysian palm oil futures eased on Monday to extend last week’s losses, hurt by rising stockpiles in top producing countries and sluggish demand. The benchmark palm oil contract for November on the Bursa Malaysia Derivatives Exchange closed down 0.15 percent at 2,044 Malaysian ringgit a tonne. Traded volume stood at 45,806 lots of 25 tonnes each, significantly above the roughly 35,000 lots usually traded by the close.
The ringgit, which has been the worst performing emerging Asian currency so far in 2015, restricted the downside as benchmark palm is priced in the local currency. “Even after the price drop, Malaysia and Indonesia failed to boost palm oil exports. Stocks are likely to rise at the end of this month in both the countries,” said a Mumbai-based vegetable oil dealer.
In top producing Indonesia, palm and lauric oil exports fell 8 percent in July from a month earlier, an industry body said last week. Data released last week showed a build-up in Malaysia’s July palm oil stocks to 2.27 million tonnes due to higher production and a slowdown in demand after the Muslim holy month of Ramadan. Palm futures fell 0.8 percent last week, extending losses to a seventh consecutive week. “Production has been rising, but demand is weak. Devaluation of China’s yuan has raised concerns over the demand,” said a Kuala Lumpur-based dealer.
The US September soyoil contract was up 0.1 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange ended up 0.2 percent. Crude Oil fell towards six-year lows on Monday, on data showing the economy of Japan, the world’s third biggest oil consumer, contracted in the second quarter. Wang Tao, a Reuters market analyst for commodities technicals, said palm oil faces a resistance at 2,052 ringgit per tonne and may retrace to a support at 2,017 ringgit.