Palm oil hits one-week low on technical drop, demand slowdown

Malaysian palm oil futures fell to their lowest in a week on Tuesday evening, a fourth straight session of falls, due to a technical correction and traders' expectations that export demand will cool towards the end of the month. The benchmark palm oil contract for December delivery on the Bursa Malaysia Derivatives Exchange fell 1.4 percent to 2,767 ringgit ($660.38) a tonne at the closing trade, its sharpest daily drop in a month and a half.
It earlier fell to an intra-day low of 2,766 ringgit, its lowest since September 11. Traded volumes stood at 58,495 lots of 25 tonnes each in the evening. "Yesterday's market decline could have been a sell signal, while good exports are already priced in," said a futures trader from Kuala Lumpur.
"Long holidays in China are coming soon, so most buying activities may already be done." Traders are expecting to see gains in export data from cargo surveyors for the September 1-20 period, before demand tapers off towards the end of the month. Intertek Testing Services and Societe Generale de Surveillance are scheduled to release Malaysian palm oil shipment data for September 1-20 on Wednesday.
The market is correcting as it is overpriced, said another trader earlier in the day. Palm oil exports from Malaysia surged over 20 percent in the first half of September from a month ago, led by strong gains in demand from China, Europe and India, cargo surveyor data showed. Palm oil may fall into a range of 2,760-2,787 ringgit per tonne, as it could have temporarily peaked around a resistance at 2,885 ringgit, said Reuters market analyst for commodities and energy technicals Wang Tao.
In other related oils, the October soyabean oil contract on the Chicago Board of Trade was down 0.4 percent, while the January soyabean oil on the Dalian Commodity Exchange fell 0.4 percent. The January palm olein contract rose 0.4 percent. Palm oil prices are affected by movements in related edible oils including soya, as they compete for a share of the global vegetable oils market.