JAKARTA: Palm futures slipped to their lowest level in more than a week on Monday, tracking comparative oils lower as investors continued to fret about European debt but expectations of a heavy rainy season helped cap losses.
Asian stocks gained on Monday after Europe took a step towards fiscal union, but the euro fell amid concerns the euro zone's fragile safety is still insufficient to prevent its sovereign debt crisis from spreading.
Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange traded 1.5 percent lower at 3,039 ringgit ($960) per tonne. Prices earlier hit 3,038 ringgit, its lowest level since December 2.
Traded volumes for the February palm contract were at 2,711 lots of 25 tonnes each, compared with 3,084 lots on Friday.
"On Friday soybean oil dropped quite heavily and today the Dalian dropped also, so the market is taking there cue," said a Kuala Lumpur-based palm trader. "It is because of what happened in Europe."
He said palm oil was likely to trade within a 3,000-3,100 ringgit range this week, as books are squared towards the end of the year.
US soy bounced from a 14-month low on Monday, while wheat ticked up from its lowest in more than five months as agricultural markets took a breather following Europe's steps to resolve its debt crisis.
China's most active May 2012 soybean oil contract eased to a near two-week low.
Wheat, corn and soybean markets are likely to remain under pressure from record-large crops around the world forecast on Friday by the US Department of Agriculture.
"Prices are lower today in unison with CBOT and the bearish USDA data," said a second Kuala Lumpur-based palm trader. "There is liquidation from some funds.
"Supplies look adequate for worldwide grains," he added. "We are not expecting a bullish report from MPOB tomorrow, more downside in the making with anemic demand."
The Malaysian Palm Oil Board (MPOB) is due to release palm oil stocks, production, and exports data for November on Tuesday.
Despite the bearish outlook, the monsoon season is helping to support prices. Earlier on Monday, the state weather agency of top palm producer Indonesia warned of floods in top producing regions Kalimantan and Sumatra.
Excessive rains can affect oil yield quality and force palm oil firms to sell the edible oil at a discount. So far, however, planters have not reported major logistical disruptions.
On the data front, cargo surveyor Intertek Testing Services said on Saturday that palm oil exports of Malaysian palm oil products for Dec 1-10 fell 5.1 percent.
In related markets, Brent crude held steady above $108, after rallying in the previous session, on hopes of steady demand growth as China's oil imports surged.
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