Malaysian crude palm oil futures fell almost two percent on Monday, extending losses from the previous week as export estimates for July remained soft amid a lack of direction from rival soyaoil. For a second time since Friday, the benchmark contact slipped past two key levels, settling just above the major support of 1,350 ringgit a tonne.
It surrendered a total of 54 ringgit, or 4 percent, in two straight days. "People are in a liquidating mood," said a trader.
"They're afraid stocks will balloon at the end of this month because of what exports have been doing, and what we're hearing about August production isn't helping," he added.
Societe Generale de Surveillance, the main surveyor of Malaysian oil palm cargoes, said on Monday exports for July 1 to 25 were estimated to have fallen almost 25 percent from June 1 to 25.
Output of palm oil, by contrast, might grow three percent in July from the official figure of 1.2 million tonnes in June, dealers said.
The thinner exports could mean that stocks of palm oil at the end of July could swell beyond June's 1.18 million tonnes to move as high as 1.22 million, they said.
At Monday's close, the benchmark third-month palm oil contract on Bursa Malaysia Derivatives, October, was down 26 ringgit, or 1.9 percent, to 1,356 ringgit ($361.79) a tonne.
It fell as much 2.1 percent on Friday as producers tried to shield the commodity, sold abroad in dollars but traded at home in ringgit, from losing competitiveness after Malaysia dropped its currency peg of 3.8 to the dollar.
Economists say the ringgit is undervalued and the palm oil industry is bracing to cut prices if the currency appreciates.
The ringgit, on a managed float, had risen to 3.7480 per dollar on Monday, compared with 3.7780 in late Asian trade on Friday.
Monday's low for the October contract was 1,353 rimggit - just above 1,350 support.
Other traded months settled down 6 to 28 ringgit.
Volume stood at 8,715 lots of 25 tonnes each, below Friday's 10,085 lots but still heavier than the 6,000 lots seen on a typically busy day.
Dealers said uncertainty in US soyaoil also weighed on prices.
August soyaoil on the Chicago Board of Trade (CBOT) fell as much as 0.12 cent in Monday's electronic trade, although it ended up 0.20 cent on Friday at 24.51 cents per lb.
In physical dealings of crude palm oil on Monday, July and August saw trades at 1,360-1,352.50 ringgit a tonne in the southern region of Malaysia and 1,360-1,350 in the central zone.
Offers were seen at 1,360 ringgit and bids at 1,355.
PALM OIL FUTURES:
July (south): 1360.
Open/High/Low: 1379/1379/1353.
Previous close: 1385.
PALM OIL PHYSICALS:
October (3rd month): 1356.
Previous settlement: 1382.
FUTURES:
Widened losses from last week as July export data remained soft and direction from soyaoil was lacking.
PHSICALS:
Down, following futures.
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