The most active soybean oil contract in Dalian tumbled to the lowest since its initiation last September, putting further pressure on palm oil especially after cargo surveyor Intertek Testing Services reported slower exports for the first half of April compared to the same period a month ago.
“Exports were slower than expected, but the market is also affected by the poor performance in other commodities,” said a trader with local commodities brokerage in Malaysia. “If the global economy is not good, the buying strength won’t be there.” The benchmark June contract on the Bursa Malaysia Derivatives Exchange lost 2.2 percent to close at 2,294 ringgit ($755) per tonne. Prices earlier fell to 2,281 ringgit, the lowest seen since December 14.
Total traded volumes stood at 37,179 lots of 25 tonnes each, higher than the average 35,000 lots. China’s economy grew 7.7 percent in the first quarter, undershooting market expectations for an 8.0 percent expansion and frustrating investors hoping the economy would rebound after posting its weakest growth in 13 years in 2012. On top of that, persisting worries that a bird flu outbreak in China could hurt soy demand also weighed on vegetable oil markets, with the most active September soybean oil contract on the Dalian Commodities Exchange falling by as much as 2.5 percent.
Soyaoil is a close competitor of palm oil and a fall in prices of the former could wean away demand from the latter. US soyaoil for May delivery lost 0.8 percent in late Asian trade. Technical analysis showed palm oil is expected to drop to 2,249 ringgit per tonne, as indicated by its wave pattern and a Fibonacci projection analysis, said Reuters market analyst Wang Tao. Malaysia, the world’s No 2 palm oil producer, will set its crude palm oil export tax for May at 4.5 percent, unchanged from April, a government circular showed on Monday.