Malaysian palm oil futures slipped off seven-week highs on Wednesday ahead of a key industry report that is expected to show stocks rising to a 22-month high last month. Losses were limited on an expected cut in yield estimates for the US soy crop crushed into competing edible oils and also after Italian Prime Minister Silvio Berlusconi said he would resign, raising hopes his debt-laden country would push through with economic reforms.
Investors are watching weather conditions in Southeast Asia on concerns La Nina rains may further disrupt oil palm harvesting during the end-year monsoon season - a scenario that could reverse a 20 percent decline in prices this year. "Before the rise in palm oil price really happens, there is going to be a decline on the high stocks. But moving forward, we are going into a weather market," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark January palm oil futures on the Bursa Malaysia Derivatives Exchange settled 0.4 percent lower to 3,034 ringgit ($970.10) after rising as high as 3,068 ringgit - a level unseen since September 21. Traded volumes stood at 23,485 lots of 25 tonnes each, compared to the usual 25,000 lots on investor caution over the eurozone debt jitters.
Technical outlook turned negative, with Reuters analyst Wang Tao saying Malaysian palm oil will fall to 2,960 ringgit per tonne as it has completed a wave "e" or wave "a" rise. Some investors are cutting back positions ahead of the industry regulator Malaysian Palm Oil Board reporting October data on Thursday which is expected to show output staying higher than exports, pushing stocks to above 2.2 million tonnes, a 22-month high. Lower crude oil pressured prices of other vegetable oils that are used in competing biodiesel. US soyoil for December delivery dropped 0.9 percent ahead of the US agriculture data report. China's most active May 2012 soybean oil contract trimmed earlier gains to end up 0.1 percent.
Comments
Comments are closed for this article.