Malaysian palm oil futures snapped a seven-day winning streak on Wednesday, as traders booked profits although concerns over weak global vegetable oil production persisted. Palm oil, which hit a 33-month high the day before, continued to draw support from heavy rains disrupting some harvesting in Malaysia and Indonesia. The market, up 40.2 percent so far this year, has also been boosted by La Nina-driven hot weather potentially curbing soya production.
"Palm is down on weaker Dalian's soyaoil and US soya complex as traders were squaring positions before year-end since most commodity prices rose over the last few days," said a trader in Kuala Lumpur. The benchmark March 2011 crude palm oil contract on Bursa Malaysia Derivatives settled 1.2 percent lower to 3,733 Malaysian ringgit ($1,206). The previous day, the contract hit the highest since March 14, 2008.
Overall traded volumes stood at 11,599 lots of 25 tonnes each, compared to the usual 15,000 lots. US corn and soyabean futures edged lower on Wednesday, easing from the highest in more than two years scaled in the previous session as dry weather in Argentina continued to raise concerns over supplies. Private US crop analyst Michael Cordonnier said on Tuesday he lowered his forecast of Argentina's 2010/11 soyabean production for a second-straight week, to 48 million tonnes.
US soyaoil for January 2011 delivery fell 0.7 percent in Asian trading hours. The most active September 2011 soyaoil contract on China's Dalian Commodity Exchange dropped 2.2 percent after hitting a 29-month high a day before. Traders said the market was overbought but fundamentals were supportive.
"Fundamentals of vegetable oils remain strong as production of palm oil has slowed down in Malaysia and weaker soyabean yields in South America," said an oil analyst with Shanghai-based brokerage. "The soyaoil prices correction could help to boost prices in future," the analyst added.
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