Malaysian palm oil falls to one-year low

Malaysian palm oil futures tumbled to one-year lows on Monday on concerns that the eurozone's deepening debt crisis will stall global economic growth and commodity demand. Palm oil prices, which have lost more than a quarter so far this year, took another hit after funds liquidated their positions in global grains and vegetable oil markets to close up third-quarter books.
Traders are losing faith in officials' ability to handle the eurozone debt crisis as government draft budget figures on Sunday showed Greece would miss a deficit target set just months ago in a massive bailout package. "The market has really gone down more than it should have purely because of the weak economic outlooks," said a trader with a foreign commodities brokerage in Kuala Lumpur.
"But there should be a bounce because palm oil has been oversold and demand is relatively strong. Funds will have to come in again to corn and soy markets after closing their books in last quarter, pushing up palm oil," he added. Benchmark December palm oil futures on the Bursa Malaysia Derivatives Exchange fell as much as 2.7 percent to 2,827 ringgit ($885.51) a tonne, the lowest since October 8 last year. The contract later settled at 2,845 ringgit. Overall traded volumes stood at 25,008 lots of 25 tonnes each.
Reuters analyst Wang Tao said palm oil is likely to rebound into a range of 2,941-2,969 ringgit per tonne, as a small five-wave cycle has been completed. The protracted declines in palm oil will draw in last-minute orders from India ahead of the Hindu festival of Diwali in late October, as well as from China, which will need to restock after the National Day public holidays this week.
High palm oil demand may do little to chip away at growing stocks in Malaysia as harvesters increase their collecting rounds in September after the holidays for the Muslims feast, Eid al-Fitr. But it keeps refined palm olein - used in cooking oil - at a $90 discount to competing Argentine soyoil, drawing in a steady flow of orders for the tropical oil. US soyoil for October delivery dropped 0.2 percent in late Asian trade, extending losses from the previous week. The rout in oilseeds and grains emerged on Friday when the US Department of Agriculture reported larger than expected stocks for corn. China's vegetable oil markets were shut for a week for the National day holiday.