Malaysian palm oil futures fell on Monday to their lowest in over three weeks despite supportive government data, weighed down by plunging crude oil prices and volatile global equities. The palm oil contract for March on the Bursa Malaysia Derivatives Exchange lost 1.5 percent to 2,398 ringgit ($547.49) per tonne at the close of trade. It hit an intra-day low of 2,383 ringgit, a low since December 18.
Traded volume stood at 49,371 lots of 25 tonnes each. It is likely the market fell because traders had already factored in the expected fall in output, said a Kuala Lumpur-based trader, referring to government data released by the Malaysian Palm Oil Board (MPOB). "Despite the better than expected export data and lower end-stocks, the market took a down turn as the available stocks are enough to counter demand," he said.
"There are also worries about the plunge in worldwide equities and crude oil." Data from the Malaysian Palm Oil Board, which was released after the market paused for the midday break, showed a 1.1 percent fall in December exports compared with a Reuters poll forecast of 6.6 percent. Inventories and production also fell in December, dropping by 9.5 percent and 15.4 percent, respectively.
Cargo surveyors reported a rise in Malaysian exports for the first 10 days of January compared with the same time period a month ago. Intertek Testing Services (ITS) reported a 15.2 percent rise in Malaysian shipments, while Societe Generale de Surveillance data showed a 7.9 percent increase. Global equities fell to a near 2-1/2 year low on Monday, while crude oil dropped close to 12-year lows, both triggered by fears over China's slowing economic growth.
Palm oil is biased to retest a support at 2,416 ringgit per tonne, with a good chance of breaking below this level and falling more towards the next support at 2,394 ringgit, said Wang Tao, a Reuters market analyst for commodities. The US March soyoil contract fell 0.7 percent, while the May soybean oil contract on the Dalian Commodity Exchange was down 1.1 percent.