Malaysian palm oil futures fell on Friday, but ended the month up almost 1 9 percent, on concerns that the United States may not meet an August 2 deadline to raise its debt limit, hitting global economic growth. A possible US sovereign credit rating downgrade if the deadline is missed has weighed on financial markets, adding to weak sentiment in palm oil futures which had posted it first weekly drop in four.
Favourable crop weather in the US grain-growing areas, as well as high palm oil stocks in Malaysia and Indonesia also weighed on the market. "The markets are choppy and traders are keenly watching the economic scenario in the light of the US debt crisis," said a trader with a foreign commodities brokerage in Malaysia.
"Fundamentally, palm oil stocks are going to remain high despite solid exports and talk of a small slowdown in production in August," the trader added. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell 0.6 percent or 20 ringgit to 3,096 ringgit ($1,050.) per tonne after going as low as 3,080 ringgit - a level unseen since July 19.
Traded volumes fell to 22,365 lots of 25 tonnes each, compared to the usual 25,000 lots, as investors remained cautious. Reuters analyst Wang Tao said Malaysian palm oil was temporarily neutral in a range of 3,083 to 3,138 ringgit per tonne.
Crude oil was heading on Friday for its first monthly rise in three as investors focused on forecasts of improved demand despite jitters over an elusive debt deal in the United States to avert a default and a credit downgrade. US soyoil for August delivery rose 0.2 percent on Thursday with improved China demand for soybeans although favourable weather in the United States capped gains.
China is likely to start importing more soybeans and vegetable oils from July after weak purchases in past months, said a Hamburg-based oilseeds analysts Oil World on Tuesday. The most active May 2012 soyoil on China's Dalian Commodity Exchange fell half percent.
Comments
Comments are closed for this article.