Palm extends losses, hits over 1-month low on weaker soyoil

KUALA LUMPUR: Malaysian palm oil futures on Tuesday dipped to their lowest in a month, tracking weaker performing soyoil on the Chicago Board of Trade.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 1.1 percent at 2,489 ringgit ($581.41) a tonne at the midday break. It touched 2,487 ringgit, its lowest since April 28, and is poised for a third straight session of declines.

Traded volumes stood at 16,929 lots of 25 tonnes each at the midday break.

"Soybean oil came off on Friday and also on overnight trade," said a Kuala Lumpur-based futures trader. He said a fading demand for palm oil once Ramadan fasting begins also leads to the market decline.

Ramadan, which began on Saturday, sees Muslims in regions such as India, Pakistan and the Middle East, break day-long fasts with communal feasting. This incurs higher usage of palm oil for cooking.

Buyers usually stock up the tropical oil a month ahead of Ramadan, hence, the demand slows down once the month of fasting begins.

Palm oil prices also take direction from related edible oil soy, as they compete for a share in the global vegetable oils market.

Soybean oil on the Chicago Board of Trade was down 0.4 percent, while China's Dalian Commodity Exchange is closed for a public holiday.

The palm oil August contract may try to stabilize in a support zone of 2,496-2,506 ringgit per tonne, and then bounce towards a resistance 2,539 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.