JAKARTA: Palm futures dropped to trade near six-week lows on Wednesday, weighed down by the euro zone debt crisis and doubts about demand after bleak inventory data earlier this week.
Benchmark February palm oil futures on the Bursa Malaysia Derivatives Exchange traded 0.3 percent lower at 2,994 Malaysian ringgit ($940) per tonne.
Traded volumes for the February palm contract were at 4,119 lots of 25 tonnes each, compared with 9,957 lots on Tuesday.
"Palm oil looks a bit slow," said a Jakarta-based trader. "Yesterday the MPOB report was similar to last month and demand also looks down for December."
Prices earlier slipped to 2,980 ringgit, matching a level hit in the previous session, which was the lowest since Nov. 3.
Palm prices have come under pressure this week after inventory data from top producer Malaysia came in above market expectations.
"Palm oil stocks topped expectations in November, which may cap near-term upside for CPO price," Ivy Ng Lee Fang, an analyst at CIMB said in a note. "Weaker exports and lower domestic usage were behind the higher stockpile.
"We continue to predict a drop in CPO price from 2Q12 onwards when La Nina concerns subside."
With demand doubts creeping in, traders have found little comfort from any possible impact on output due to the rainy season in top Southeast Asian producing countries.
Earlier this week, the state weather agency of number one palm producer Indonesia warned of floods in top producing regions Kalimantan and Sumatra.
Exports of Indonesian palm oil for November rose 42.5 percent, according to Reuters calculations based on data from an industry source.
In other markets, Asian shares drifted lower and the euro floundered near an 11-month low after the US Federal Reserve failed to take any new steps to stimulate growth, while fear of credit downgrades in Europe also dented sentiment.
US corn and soy fell, giving up last session's modest gains as Europe's unresolved debt crisis weighed.
China's most active May 2012 soybean oil contract rose slightly but remained near two-week lows.
Brent crude slipped towards $109 as investors booked profits after prices rose more than $2 in the previous session.
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