Palm oil slips

Malaysian palm oil futures slipped to the lowest in almost three weeks on Wednesday, stretching their losses into a fourth session as weakness in comparative markets overseas dragged, although robust export demand put a floor under prices. Oil prices slid over 3 percent on Tuesday amid evidence the United States and top oil exporter Saudi Arabia were pumping more supplies. Low crude prices dent demand for palm oil by making the latter less attractive for blending into biofuels.
Weak overnight US and Dalian prices of soybeans, which are crushed to produced rival soyoil, also dragged on palm. "Our market is weak despite the strong exports because the global markets, grains, softs, energy, are down," a trader with a foreign commodities brokerage in Kuala Lumpur said.
"The CBOT was down yesterday night, palm olein on Dalian was also down quite sharp, so palm opened lower. But towards the later part of the morning, palm recovered a bit on the good exports." The benchmark August contract on the Bursa Malaysia Derivatives exchange had edged down 0.8 percent to 2,140 ringgit ($592.39) a tonne by Wednesday's close. Prices earlier touched 2,131 ringgit, their lowest since April 30.
Total traded volume stood at 39,713 lots of 25 tonnes each, above the average 35,000 lots. Cargo surveyor Intertek Testing Services (ITS) reported strong overseas sales of Malaysian palm oil, allaying concerns that demand would fizzle out after exports surged in the first half of the month. The ITS report showed shipments rose 52.6 percent to 1,070,282 tonnes between May 1-20 from the same period in April, with China and Europe doubling purchases, and India nearly tripling theirs.
Another surveyor Societe Generale de Surveillance showed exports for the same period rose 48.1 percent. The start of the holy month of Ramazan next month, marked by communal fasting and feasting by Muslims, typically drives up consumption of edible oils and may underpin demand for palm in May and June, traders say. The market is now eyeing crude oil and rival vegetable oil markets for further trading cues. In vegetable oil markets, the US July soyoil contract was up 0.4 percent by 1010 GMT, while the most active September soybean oil contract on the Dalian Commodity Exchange dropped 2.3 percent.