SINGAPORE: Malaysian palm oil futures inched down on Monday, on track for a third consecutive session of losses, as investors remained cautious ahead of the release of export data this week which will provide clues about the demand outlook for the edible oil.
Traders are eyeing shipment data for the first 10 days of January, due out on Thursday, to gauge the impact of Malaysia's zero crude palm oil export tax. The market is also keeping a close watch on any rejected cargoes from China due to its stricter import policy.
Malaysia's inventory levels are also expected to edge lower in December due to slower production. Industry regulator, the Malaysian Palm Oil Board (MPOB), will release official stocks and output data also on Thursday.
The US Department of Agriculture (USDA) report on the 2012 US soybean harvest due Friday is also in focus, as a higher soybean production for crushing into soybean oil may shift demand away from palm oil.
"People are waiting for the MPOB & USDA data releases later this week. Traders are staying on the sideline as palm oil technically faces stress at the 2,500-ringgit mark," said a dealer with a foreign commodities brokerage in Malaysia.
By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange had fallen 0.7 percent to 2,450 ringgit ($805) per tonne.
Total traded volume stood at 21,195 lots of 25 tonnes each, higher than the usual 12,500 lots.
Technicals showed that palm oil is expected to fall further to 2,407 ringgit, as a drop from the Jan. 2 high of 2,524 ringgit has yet to end, said Reuters market analyst Wang Tao.
Favourable weather in South America leading to better soybean crop prospects and potentially higher supply of soybean oil could also place further pressure on palm oil prices.
In related markets, Brent crude futures held above $111 per barrel on Monday, supported by signs that the world's biggest economies are on a steady recovery path, but inventory data showing weak fuel demand in the United States curbed gains.
In competing vegetable oil markets, US soyoil for March delivery gained 0.5 percent in early Asian trade, lifted by bargain-hunting activities in the soybeans market, which bounced back from a six-week low.
The most active May soybean oil contract on the Dalian Commodity Exchange was down 0.2 percent by the midday break.
Center>Copyright Reuters, 2013