SINGAPORE: Malaysian palm oil futures extended losses to a 6-week low on Thursday, as disappointing economic data from the United States and Europe cast doubts on global economic recovery and commodity demand.
Palm oil futures touched a low at 3,417 ringgit, a level last seen on March 23, as investors reacted to a slew of data that signalled stagnant hiring and weak manufacturing activity.
"It's very much the global sentiment. Fundamentally palm oil is still bullish because supply is still facing issues. The tree stress is already confirmed, so the next catalyst will be the Malaysian Palm Oil Board numbers," said Alan Lim, research analyst with Kenanga Investment Bank in Malaysia.
By the midday break, benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange fell 0.8 percent to 3,424 ringgit ($1,130) per tonne.
Traded volumes stood at 11,735 lots of 25 tonnes each, slightly lower than the usual 12,500 lots.
Traders are now looking at production numbers for clues on market movement as strong exports in April failed to lift the market. Industry regulator Malaysian Palm Oil Board will issue official data on output and stocks next week.
A lower output will add further stress to palm oil stocks, which fell below 2 million tonnes in March.
Demand for the edible oil seems to be healthy as indicated by cargo surveyor data. April exports jumped by 9.4 and 10.4 percent from a month ago, according to Intertek Testing Services and Societe Generale de Surveillance respectively.
Brent crude steadied above $118 a barrel on Thursday, reflecting caution among investors ahead of a key US employment report.
In other vegetable oil markets, the most active US soyoil contract for July lost 0.1 percent in Asian trade while the most active Dalian soyoil September contract slipped by a steeper 1.1 percent.
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