Palm slips on weak export demand

KUALA LUMPUR: Malaysian palm oil futures slipped in early trade on Wednesday and were headed for a seventh session of decline in eight, on weak export demand and tracking falls in soyoil on the Chicago Board of Trade (CBOT).

The benchmark palm oil contract for February delivery on the Bursa Malaysia Derivatives Exchange was down 0.2 percent at 2,468 ringgit ($605.79) a tonne at the midday break.

Palm snapped six sessions of declines in the previous session on short-covering and a decline in November production. It shed 5.5 percent in the six sessions through Monday, hitting a five-and-a-half month low of 2,455 ringgit on Monday evening.

Trading volumes stood at 25,318 lots of 25 tonnes each at the midday break on Wednesday.

The market is down due to weaker soybean oil prices and exports, said a futures trader from Kuala Lumpur, referring to export data from cargo surveyors Intertek Testing Services and Societe Generale de Surveillance.

Demand in the coming weeks are expected to be low due to weak demand during the winter and after India, the world's largest edible oil importer, raised import taxes to a more than decade-high, he added.

Societe Generale de Surveillance said exports during Dec. 1-10 fell 22.9 percent from a month earlier, while Intertek Testing Services reported a 16.6 percent decline for the same period.

Palm oil demand usually weakens at year-end as it solidifies in cold temperatures, leading buyers such as China and Europe in the northern hemisphere to reduce purchases.

In other related oils, the January soybean oil contract on the Chicago Board of Trade fell 0.2 percent, while the January soybean oil contract on the Dalian Commodity Exchange was down 0.3 percent.

Palm oil prices are affected by other edible oils as they compete for a share in the global vegetable oils market.