Malaysian palm oil futures fell 1.3 percent on Wednesday, weighed down by losses in other edible oils and investor worries about the ability of European leaders to tackle a debt crisis threatening the global financial system. Benchmark December palm oil futures on the Bursa Malaysia Derivatives Exchange closed at 2,910 ringgit ($925) a tonne. Earlier, prices had fallen as low as 2,885 ringgit.
"The eurozone problems are still uncertain - there doesn't seem to be a consensus," said a Kuala Lumpur-based trader. Investor hopes for a bigger bailout fund for eurozone debtors gave way to worries about the details on Wednesday. On Monday, benchmark palm prices fell to 2,857 ringgit, the lowest level in almost one year, and have eased 3 percent so far this week as concerns about the global economy dominate sentiment. Traded volumes for the November contract stood at 18,649 lots of 25 tonnes each compared with 14,191 lots on Tuesday.
Reuters analyst Wang Tao saw palm oil futures resuming their downtrend towards 2,820 ringgit per tonne, as indicated by the lower channel line of a falling channel. In other vegetable oil markets, US soyoil for October delivery reversed earlier losses to trade higher, while China's most active May 2012 soybean oil contract eased. "The market is again lousy," said a Jakarta-based palm oil trader. "So far, stocks markets are good - I just hope this can bring more buyers in."
A Reuters survey also showed that India, the world's top buyer of edible oils, could boost imports 5.2 percent in 2011/12, reversing a fall this year. The palm market, which has lost 23 percent so far this year, is counting on demand from both nations to support prices. India will celebrate the Diwali festival in late October while China will be closed for a national holiday next week.
There is far from a consensus on second half outlook. "We forecast CPO price to drop to RM2,500/tonne by the year end, driven by looming excess supply," Royal Bank of Scotland analysts said in a note. "We forecast global CPO production to grow by 11.6 percent yoy to 51.2 million tonnes this year. we expect global demand to grow by 8 percent yoy only to 49.6 million tonnes."