Malaysian palm oil futures eased on Monday, tracking other vegetable oils lower as cautious traders eyed the negative impacts of a possible default by Greece on its debt repayment. The September palm oil contract on the Bursa Malaysia Derivatives exchange ended down 0.5 percent at 2,266 ringgit ($599) a tonne at the close, after trading in a range of 2,260 to 2,277 ringgit.
Palm prices have fallen about 2 percent so far in June and touched a three-week low last week. "Regional equities are all depressed today," said a palm trader with a foreign commodities brokerage in Malaysia. "People are watching whether the Shanghai stock market's big drop will indirectly impact commodity prices." European shares sank almost 4 percent and government bond yields in Italy, Spain and Portugal jumped on Monday as investors priced in a growing risk that Greece will be the first country to leave the euro.
China shares dived another 3 percent, bringing the losses in the past two weeks to 25 percent, with the Chinese central bank's measures on Saturday to support the economy unable to calm jittery investors. China is a top buyer of palm, which is used mainly as an ingredient in food such as biscuits and ice cream, and in the production of biofuels.
Total traded volume for palm was thin at the close with only 19,111 lots of 25 tonnes each changing hands, compared with the usual 35,000 lots. Palm oil may consolidate in a neutral range of 2,250-2,293 ringgit per tonne for one day before rising again, according to Reuters market analyst Wang Tao. In other vegetable oils, the US July soyoil contract was down 0.8 percent, while the most active January soybean oil contract on the Dalian Commodity Exchange slipped 1.4 percent.
"The only friendly factor is the ringgit," said a second palm trader, adding that Malaysia's June palm export data from cargo surveyors on Tuesday may offer future direction. The Malaysian ringgit traded at a 10-year low and is the currency that benchmark palm is priced in, offering some support to the tropical oil. In related news, Indonesia's Co-ordinating Minister of Economic Affairs, Sofyan Djalil, told reporters that the world's top producer would now introduce a levy on palm exports on July 16, instead of July 1 as planned. "There are so many technical matters, such as adjusting the export tax," Djalil said. "We can collect on July 16."
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