Malaysian palm oil futures fell on Tuesday as global crude oil prices tumbled to 12-year lows this week, with declining production data from a government body doing little to boost market sentiment. The palm oil contract for March on the Bursa Malaysia Derivatives Exchange lost 0.6 percent to 2,383 ringgit ($540.49) per tonne at the midday break, recovering slightly from a new three-week low of 2,372 ringgit reached earlier in the day.
"The market still looks weak on the back of crude oil trading at new lows and on uncertain Asian equity markets," said a trader from Kuala Lumpur. "Any rebound in the afternoon session is due to a retracement on an oversold market," the trader added. Traded volume stood at 41,572 lots of 25 tonnes each. Data from the Malaysian Palm Oil Board on Monday showed a 1.1 percent fall in December exports as compared with a Reuters poll forecast of 6.6 percent fall. Inventories and production also fell in December, dropping by 9.5 percent and 15.4 percent, respectively.
Palm oil may slide a bit more to 2,367 ringgit per tonne, as it has broken support at 2,394 ringgit, according to Reuters market analyst for commodities Wang Tao. In competing vegetable oil markets, the US March soyoil contract lost 0.3 percent, while the May soybean oil contract on the Dalian Commodity Exchange was down 1.2 percent.
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