Malaysian palm oil dips

Malaysian palm oil futures dipped more than 1 percent on Thursday, as persistent uncertainty surrounding the economic impact of the devastating Japanese earthquake and tsunami weighed on prices. The benchmark May 2011 crude palm oil contract on Bursa Malaysia Derivatives eased to 3,325 Malaysian ringgit ($1,090) a tonne, after earlier touching a low of 3,305 ringgit.
Prices of the vegetable oil, used in products such as food, cosmetics, tyres and biofuels, hit a near four-month low of 3,250 on Tuesday. "It is trading in a tight range," said a trader. "External factors are still full of uncertainty regarding Japan. Whatever happens to Japan will affect the global economy, especially equities."
"There is a lot of uncertainty," he added. "Later today, I expect a range trade between 3,300 to 3,350." Operators of a quake-crippled nuclear plant in Japan dumped water on overheating reactors on Thursday while the US expressed growing alarm about leaking radiation and urged its citizens to stay well clear of the area.
Traded volume on the Malaysian benchmark stood at 4,344 lots of 25 tonnes each, compared with a near three-week high of 25,206 lots notched on Wednesday. ICDX's May CPO futures contract was at 9,795 rupiah per kg, compared to 9,770 rupiah per kg when it opened. Market volume was 162 lots of 10 tonnes each. Japan imports around 500,000 tonnes of palm oil each year. Global palm oil production was about 45 million tonnes in 2010.
"There is still a lot of uncertainties surrounding the Japan crisis," said another trader. "People are still cautious of the impact on the economic side. "Selling comes back in, when the market rebounds," the trader added. "Investors are squaring their positions ... At the moment they are more on the sidelines, and moving in an out of the market." In comparable vegetable oil markets, the most-active September 2011 soyoil on the Dalian Commodity Exchange traded up more than a percent at 9,864 yuan. US corn and wheat futures rose around 1.5 percent on Thursday on bargain hunting after a selloff this week triggered by Japan's devastating earthquake, which raised doubts over the nation's grain imports.
Brent crude reversed losses, heading back towards $111 after losing 1 percent earlier on Thursday, as investors weighed Middle East tensions against risks to demand from the nuclear crisis in quake-hit Japan. Palm oil is seen heading for record highs in 2011 on expectations for costly crude oil to bolster biodiesel demand and offset better harvests, participants at a Malaysia conference said this month.