Malaysian palm oil futures fell nearly 1 percent on Wednesday in choppy trading as weak technicals and sluggish external markets discouraged position-taking. Palm oil, used in products ranging from shampoo to biofuels, gained almost 4 percent in May, after three straight monthly losses, but has fallen 11.3 percent so far in 2011.
"Strong exports have been largely priced in but with weak technicals and lack of direction in other competing markets, palm oil is taking a breather," said a trader with a foreign commodities brokerage in Kuala Lumpur.
The benchmark August crude palm oil contract on the Bursa Malaysia Derivatives Exchange settled 33 ringgit lower to 3,360 ringgit ($1,116) a tonne. On Monday, the contract hit a more than two-month high.
Overall traded volume slumped to 17,802 lots of 25 tonnes each from the usual 25,000 lots.
Technicals were negative. Palm oil would retrace more to 3,341 ringgit per tonne as indicated by a triangle and a Fibonacci retracement analysis, Reuters technical analyst Wang Tao said.
May exports rose above 1.35 million tonnes, driven by strong demand from China, India and the European Union, according to cargo surveyors.
Higher demand comes as the Malaysian ringgit weakens, making crude palm oil priced in that currency cheaper to process for refiners.
Demand from refiners could temper the rise in crude palm oil stocks, which are set to rise to around 1.7 to 1.8 million tonnes this month as production strongly rebounds after two years of erratic weather.
US soyoil for July delivery rose 0.1 percent during Asian trade, although the most-active January 2012 soyoil contract on Dalian slipped.
"The market is directionless as players are trading cautiously on possible policy controls to be announced," said an oil analyst with a Shanghai-based local brokerage.
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