Palm oil falls to new 9-month lows on weak global sentiment
Asian stock markets plunged on Tuesday as investors dumped riskier assets in a global rout triggered by fears that political leaders are failing to tackle debt crises in Europe and the United States.
"Palm oil is trying to find a balance when crisis in US and Europe is hitting global markets while demand-supply fundamental in Malaysia is expected to be bullish," said a trader in Kuala Lumpur.
He added: "There's a tendency that end stocks in August will drop below 2 million tonnes due to weaker production as there are less workers to harvest fresh fruit during the festival."
Workers in top palm oil producing countries, Malaysia and Indonesia, are expected to take long break during the key Islamic festival of Eid Al-Fitr in early August, which will cut palm oil output and lift prices.
Palm oil still lost ground, for now. The benchmark October crude palm oil contract on Bursa Malaysia Derivatives fell 1.7 percent to 2,942 ringgit ($974.495) per tonne after hitting 2,920 ringgit -- the lowest since Oct. 20 last year.
Overall traded volume rose to 15,465 lots of 25 tonnes each from the usual 12,500 lots.
Traders are also on the lookout for official data of July's palm oil stocks, production and exports as well as exports data of the first ten days of this month due to released on Wednesday.
Brent crude plunged to a six-month trough below $99 a barrel in Asia hours, dragging other vegetable oils lower.
US soyoil for August delivery dropped 2.3 percent on Tuesday after soybean fell to its lowest since mid-March following a cut in US credit rating.
In China, the most active May 2012 soyoil on Dalian Commodity Exchange fell 2.2 percent, tracking weak sentiment in global markets.
"China's soyoil followed overseas markets, especially crude oil," said Zhang Juan Cong, an oil analyst with Dadi Futures in China's southern city of Hangzhou.
"There is room for the prices to fall further but it depends on how the US markets perform. However, weak global oilseeds supply and strong demand from China will limit losses of China's soyoil futures," he added.
Copyright Reuters, 2011