Malaysian palm oil futures flirted with one-month lows on Tuesday, falling as much as 2 percent with sentiment hit by the collapse of Greek bailout talks. The September palm oil contract on the Bursa Malaysia Derivatives exchange ended down 1.7 percent at 2,229 ringgit ($591) a tonne at the close after trading in a range between 2,221 and 2,247 ringgit. Palm prices were little changed throughout June but currently trade near a one-month low last breached on June 22 at 2,218 ringgit.
"It's initially because the stock market in China has dropped sharply," said a palm trader with a foreign commodities brokerage in Malaysia. "The equity market in China is indirectly impacting commodity prices." Eurozone stocks, low-rated bonds and the euro weakened as Greece looked set to default on a repayment due to the International Monetary Fund and to plunge deeper into financial crisis.
Total traded volume for palm at the midday break was 52,147 lots of 25 tonnes each, compared with the usual 35,000 lots. Palm oil may break support at 2,216 ringgit per tonne and fall more to the next support at 2,182 ringgit, according to Reuters market analyst Wang Tao. In other vegetable oils, the US July soyoil contract eased 0.7 percent, while the most active January soybean oil contract on the Dalian Commodity Exchange fell 1.9 percent.
"The key issue is the macro event that is going on in Greece," said Ivy Ng, regional head of plantations research at CIMB Investment Bank. On the data front, exports of Malaysian palm oil products in June rose 6.2 percent to 1.65 million tonnes from 1.55 million tonnes shipped in May, cargo surveyor Intertek Testing Services said. In related news, top palm oil producer Indonesia said on Monday it would now introduce a levy on palm exports on July 16, instead of July 1. "The strong (June) demand could be partly due to buying on concerns that El Nino could effect supplies," Ng said, adding that the planned Indonesian levy may be supported by major palm planters but could hurt smallholders. Separately, Indonesia will keep its export tax for crude palm unchanged at zero in July.
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