Malaysian crude palm oil futures slipped on Friday as a much-anticipated US crop report showed a higher-than-expected forecast of oilseed supplies, temporarily overshadowing prospects of lower production due to erratic weather. The US Department of Agriculture January crop report painted a rosier picture for global supplies on Thursday, while the Malaysian Palm Oil Board said this week that December stock levels were higher than expected.
"With both the highly anticipated reports disappointing the bulls, the market will henceforth look at fundamentals," said a trader with a domestic commodities brokerage in Malaysia. Benchmark March palm oil futures on the Bursa Malaysia Derivatives Exchange fell 1.6 percent to close at 3,151 ringgit ($1,007) per tonne. Prices earlier touched an intraday low of 3,143 ringgit, a level last seen on December 29.
Traded volumes stood at 30,727 lots of 25 tonnes each, higher than the usual 25,000 lots for the first time in the week. Palm oil futures will clear a support at 3,176 ringgit per tonne to head towards 3,140 ringgit thereafter, based on technical analysis, Reuters market analyst Wang Tao said.
The Malaysian weather office upgraded its heavy rain warning to orange from yellow for Pahang and Johor, key oil palm producing states that account for 30 percent of national output. The industry expects January production levels to be lower but demand is expected to follow suit.
Cargo surveyors Intertek Testing Services and Societe Generale de Surveillance reported a 14 and 19 percent drop in Malaysia's palm oil exports for first 10 days in January. The cargo surveyors will release exports data for January 1-15 on Monday. In related markets, Brent crude rose to close to $112 a barrel on Friday, adding to the previous day's rally on the prospect of Nigeria's oil unions halting the sector from Sunday, part of a national strike against the end of fuel subsidies.
The bearish USDA report also weighed on some vegetable oil markets. The most active US soyoil contract for March delivery was slightly up after earlier losses while the most active September 2012 soyoil contract on China's Dalian commodity exchange lost 0.8 percent.