Malaysian palm oil futures continued their decline for a fifth straight day to hit their lowest in nearly six-and-a-half years on Tuesday, as traders focused more on weakness in competing markets than data showing stronger exports this month. By Tuesday's close, the benchmark palm oil contract for November on the Bursa Malaysia Derivatives exchange was down 0.79 percent at 1,902 ringgit ($451.73) a tonne, erasing earlier gains and after hitting 1,863 rinngit in afternoon trading, its lowest since March 4, 2009.
Traded volume stood at 77,227 lots of 25 tonnes each, more than double the roughly 35,000 lots usually traded daily. "It was just a technical correction before a continuation of the selloff," said a trader with a foreign commodities brokerage in Kuala Lumpur, adding that August export figures had buoyed prices early in the day.
"They took their cue from the weaker Dalian to sell down the market," he said referring to China's Dalian Commodities Exchange. Exports of Malaysian palm oil products for August 1-25 rose 10.75 percent to 1,275,869 tonnes from 1,152,045 tonnes shipped during July 1-25, cargo surveyor Intertek Testing Services said.
According to Societe Generale de Surveillance (SGS) exports over the same period rose 9.1 percent to 1,285,247 tonnes from 1,178,568 tonnes shipped during July 1-25. Physical demand for palm also remained weak. "World demand is slowing down," a second trader said. Malaysian palm oil futures fell more than 4 percent on Monday as the tropical oil tracked other global markets lower on concerns about the Chinese economy. In comparative vegetable oils, the US September soyoil contract was up 1.09 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange was down 4.27 percent. Dalian RBD palm oil was down 5.39 percent.