SINGAPORE: Malaysian crude palm oil futures edged down on Wednesday, as traders booked profits partly on weaker exports and better production outlook in Malaysia after a recent US weather-fuelled rally.
Malaysia's July 1-15 palm oil exports tumbled more than 20 percent from a month ago at a time when stronger production is expected for the month. Slower exports and higher output could see palm oil stocks climb again after falling to a 14-month low in June.
But some traders kept a bullish outlook as the US drought that damaged soybean crops could still shift demand to refined palm oil that is trading at a discount of above $200 to soyoil.
"I think the market just doesn't have enough push to go up further at the moment. But it won't be going down much also because of the wide spread between soybean oil and palm oil," said a Singapore-based trader with a commodities house.
By the midday break, the benchmark October palm oil futures on the Bursa Malaysia Derivatives Exchange fell 1.1 percent to 3,027 ringgit ($959) per tonne, after going as low as 3,009 ringgit.
Traded volumes stood at 15,125 lots of 25 tonnes each, higher than the usual 12,500 lots.
Cargo surveyor Intertek Testing Services reported a 21 percent decline in Malaysian exports for July 1-15. Another cargo surveyor, Societe Generale de Surveillance, posted a 26.1 percent drop in exports for the same period.
Global traders are watching the weather damage on US crops as the worst drought since 1956 could trigger a serious shortage of oilseeds and vegetable oils, boosting prices and stirring food-driven inflation.
The US Department of Agriculture rated soybean crop at 34 percent good-to-excellent in a Monday report, down 6 percentage points from the previous week.
There is also the possibility of an El Nino weather pattern returning to Southeast Asia at the end of the year, bringing drought and crimping palm oil production.
Although climate indicators for an El Nino event in the western Pacific have eased slightly in the past fortnight, meteorologists still expect the weather pattern to form late in 2012.
Brent crude slipped below $104 a barrel on Wednesday, snapping five days of gains as Federal Reserve Chairman Ben Bernanke offered no signs of further monetary stimulus to boost growth in the world's top oil consumer.
Other vegetable oil markets also traded lower. By 0508 GMT, the most active US soyoil for December delivery fell 0.2 percent and the most active January 2013 soyoil contract on the Dalian Commodity Exchange lost 0.7 percent.
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