Malaysian palm oil falls

Malaysian palm oil futures fell 1.2 percent on Monday as weaker overseas soy complex weighed on market sentiment at the time when stocks are growing. Palm oil inventories in the world's No 2 producer hit 18-month highs in June as strong production due to favourable weather outpaced sluggish overseas demand. Traders expected stocks in July to stay above 2 million.
"The export data for the first half of this month didn't excite the market," said a trader in Kuala Lumpur, referring to the report on overseas demand for Malaysian palm oil products released last week.
"If the total exports cannot go beyond 1.8 million tonnes by the end of this month it is not going to help the ample stocks scenario." Cargo surveyors will issue exports data for July 1-20 on Wednesday and some traders expect some further declines.
The benchmark October crude palm oil contract on Bursa Malaysia Derivatives settled down 37 ringgit to close at 3,078 ringgit ($1,024) per tonne. Overall traded volume was 22,876 lots of 25 tonnes each, below the usual 25,000 lots.
Worries over US debt crisis continue to stress broad commodity markets. "The palm oil market is moving according to external markets such as grains complex and crude oil," said a trader with foreign brokerage in Kuala Lumpur.
US corn slid over 2 percent on Monday, weighed down by concerns over US and European debt, after strong gains last week on forecasts of hot weather which could threaten crop yields.
Brent crude dropped below $117 a barrel on Monday on growing fears of a possible sovereign debt default in United States and as another potential emergency stock release from the International Energy Agency (IEA) weighed on prices. Other vegetable oils were mixed. US soyoil for August delivery fell 1.1 percent in Asia hours, while the most active May 2012 soyoil on China's Dalian Commodity Exchange dropped 0.6 percent.
"Although soybean stocks were not at record high, some investors still booked profit in soyoil markets," said an analyst with local brokerage in Shanghai. Traders said China's current commercial stocks of soybean stood at 6.5 million tonnes though the country's Grain and Oils Information Center expected soybean imports in 2011 are expected to decline 6.9 percent from a year earlier.