KUALA LUMPUR: Malaysian palm oil futures dropped nearly 6% to a more than one-week low on Monday as weaker July exports and estimates of a rise in production weighed on investor sentiment.
The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange ended down 252 ringgit, or 5.77%, at 4,117 ringgit ($974.78) a tonne, its steepest decline in over a month.
Palm hit its lowest since July 23 after rising 2.3% last week.
“Palm oil prices are experiencing a much-awaited profit taking on lower-than-expected July export data, which shows 1.42-1.44 million tonnes of shipments, down from 1.51-1.54 million tonnes in June despite higher working days,” said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
“The destination demand has been lower from last week, apart from India.”
Exports of Malaysian palm oil products for July fell between 5.0% and 7.7% from June, cargo surveyors said on Saturday.
The market is now awaiting Malaysia’s July production numbers to assess the end-month stockpile.
The Southern Peninsula Palm Oil Millers’ Association estimated July production in some parts of Malaysia to have risen 2% from the month before, traders said.
Oil prices fell on worries over China’s economy after a survey showed growth in factory activity slipped sharply in the world’s second-largest oil consumer, with concerns compounded by a rise in oil output from OPEC producers. Weaker crude oil futures make palm a less attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract fell 3.6%, while its palm oil contract slipped 4.2%. Soyoil prices on the Chicago Board of Trade were down 1.3%.
Palm oil is affected by price movements in related oils as they compete for a share in the global vegetable oils market.
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