SINGAPORE: Malaysian palm oil futures dropped to a one-month low on Wednesday, as forecasts for a higher supply of rival soybean oil stoked concerns of a global vegetable oil surplus.
The bearish view of soybean oil from the US Department of Agriculture (USDA), coupled with Malaysia's record high palm oil stocks in November, have put palm oil futures on track for their steepest annual loss since 2008.
"CBOT (Chicago Board of Trade) soyoil came down yesterday by about 90 points, and there were some traders who were trying to break the previous low," said a trader with a foreign commodities brokerage in Malaysia.
By the midday break, the benchmark February contract on the Bursa Malaysia Derivatives Exchange had lost 2.4 percent to 2,235 ringgit ($730) per tonne, slightly off a low at 2,233 ringgit, a level unseen since Nov. 12.
Total traded volumes stood at 15,739 lots of 25 tonnes each, higher than the usual 12,500 lots.
Traders are looking out for Malaysia's new crude palm oil export tax that will be formalised in a gazette on Dec. 17 under a new tax structure that aims to claw back market share from top producer Indonesia.
Despite higher supply of global vegetable oil, the steep discount between palm oil and soybean oil could stimulate high export demand for palm oil and send prices rising in early 2013, said Hamburg-based analysts Oil World.
Palm oil imports by India, the world's top vegetable oil buyer, are likely to have fallen in November from October levels, which were the highest in at least three years, as demand shrank with the start of cold weather that solidifies the oil, a Reuters survey showed.
In a bullish sign for palm oil, Brent crude held above $108 a barrel on Wednesday as OPEC reduced oil supply, although rising output from the United States and uncertainty about its budget for next year limited price gains.
In other vegetable oil markets, US soyoil for January delivery fell 0.2 percent in early Asian trade, after falling by almost 2 percent in the previous session. The most active May 2013 soybean oil contract on the Dalian Commodity Exchange also lost 1.5 percent.
Center>Copyright Reuters, 2012
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