Palm oil registers sharpest drop in a month

Malaysian palm oil futures registered its sharpest daily decline in a month on Monday evening, falling for a third straight day on weakness in soyaoil on the Chicago Board of Trade. The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 1.7 percent at 2,204 ringgit ($538.88) a tonne at the end of the trading day for its sharpest daily decline since July 13.
It had dropped earlier by as much as 1.9 percent to 2,200 ringgit, its lowest since August 7. Trading volumes stood at 35,352 lots of 25 tonnes each at the end of the trading day. "Palm is down on soyaoil," said a Kuala Lumpur-based futures trader, referring to soyaoil's sharp declines on Friday. Soyaoil and soyabeans on the US Chicago Board of Trade fell on market concern that a trade dispute between Washington and Beijing would cause US stockpiles, already projected at a record high, to rise even further.
The US Department of Agriculture on Friday raised its outlook for domestic corn and soyabean harvests by a more than expected amount because of good weather during key phases of development.
The trader also said that palm oil could remain bearish in the medium term, citing rising production and end-stocks. "August exports are also not going to be good, as buyers would wait for the zero percent crude palm oil export tax rate to begin in September," he added.
Malaysia lowered its export tax on crude palm oil for September to 0 percent, down from 4.5 percent in August, the Malaysian Palm Oil Board (MPOB) said on Monday, citing the national customs department. The MPOB had reported on Friday that July end-stocks in Malaysia rose by 1.3 percent to 2.21 million tonnes in a second month of gains, while exports grew by 6.8 percent from June to 1.21 million tonnes.
Production in July rose 12.8 percent from the previous month to 1.5 million tonnes and is set to climb in line with the seasonal trend until its peak towards the last quarter of the year. A second palm oil trader said that palm also came under pressure in the afternoon from concerns over the US-China trade dispute.
In related oils, the Chicago December contract for soyabean oil extended Friday's 1.6 percent decline, dropping by 0.8 percent on Monday. The January soyabean oil contract on China's Dalian Commodity Exchange dropped 0.9 percent, while the Dalian January palm oil contract was also down 0.7 percent.
Palm oil prices are affected by movements of other edible oils that compete in the global vegetable oils market.