Malaysian palm oil notched a third-straight day of declines on Thursday as comparative oil prices such as soybean and crude weighed and investors eyed export data due later this week. The benchmark June crude palm oil contract on the Bursa Malaysia Derivatives exchange ended at a two-week low at 3,282 Malaysian ringgit ($1,085) a tonne.
Traded volume on the June contract was 18,949 lots of 25 tonnes each, versus Wednesday's total at 13,246 lots. Pushing sentiment down since Monday has been data that showed March palm oil stocks in Malaysia rose to a three-month high as production surged nearly 30 percent.
"People are looking for new leads," said one trader on market sentiment. "For now, the direction is from crude oil, and Dalian, which is also uncertain at this point... these decide the factors for palm oil." Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance are due to issue Malaysia's April 1-15 exports on Friday. The most-active September 2011 soyoil on the Dalian Commodity Exchange traded at 9,978 yuan versus an open at 10,080 yuan.
Palm oil analysts say every change of $10 per barrel in the price of crude oil could result in a change of 200 ringgit a tonne in the price of crude palm oil. Although palm oil is less likely to be channeled into biofuels because of a lack of government subsidies, mandates in Brazil and the United States may see more soyoil taken up, which leaves palm oil to lead the food sector. Palm oil prices have now fallen steeply since touching a three-week high at 3,454 on Monday.
The Chinese government will use all the tools at its disposal to stabilise prices and wrestle inflation under control, the official Xinhua news agency said late on Wednesday after a cabinet meeting. Major palm oil buyer China will release consumer prices and other key data such as GDP on Friday that will be closely watched by the market as China has moved to cap some vegoil prices. Also weighing on palm oil prices this week, leading industry analyst Dorab Mistry said on Tuesday that palm oil may fall below 3,000 ringgit.
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