SINGAPORE: Malaysian palm oil futures fell to an 8-week low on Monday, as election results in Greece and France threatened to undermine austerity measures in place to prevent the euro zone debt crisis from spreading.
French voters outsted incumbent Nicolas Sarkozy in a presidential election on Sunday while the first Greek election since the euro zone debt crisis threatened to put the country's bailout programme at risk.
Concerns of weaker global growth were compounded by a weaker-than-expected US jobs data that cast doubts on the growth propsects of the world's largest economy.
Higher palm oil production in Malaysia, the world's No2. supplier of the vegetable oil, also weighed on the market, although limited supply of competing soyoil.
"Palm oil prices plunged in unison with crude oil and CBOT (Chicago Board of Trade) soyoil futures. There was also talk that April output versus March could be higher by 5-6 percent on average," said a trader with a local commodities brokerage in Malaysia.
"However, the market is looking oversold and with both MPOB (Malaysian Palm Oil Board) and USDA (US Department of Agriculture) reports scheduled on May 10. There could be more position squaring ahead of those reports."
By the midday break, benchmark July palm oil futures on the Bursa Malaysia Derivatives Exchange fell 1.2 percent to 3,318 ringgit ($1,084) per tonne.
Traded volumes stood at 9,755 lots of 25 tonnes each, thinner than the usual 12,500 lots, as traders were unwilling to take positions in a bearish market.
Palm oil will fall to 3,253 ringgit per tonne based on technical analysis, said Reuters market analyst Wang Tao, adding that the contract may hover around 3,325 ringgit on Monday and plunge to 3,253 ringgit on Tuesday.
Yet palm oil fundamentals look healthy as the latest export data showed that shipments jumped by almost 10 percent, signalling robust demand for the edible oil from Asia.
Market players have shifted their focus to exports for the first 10 days of May, in which an improvement could boost demand outlook for the edible oil.
Traders are also concerned with the level of palm oil stocks in No.2 producer Malaysia, with a higher production potentially easing off the effects of higher exports eating into stocks.
Industry regulator Malaysian Palm Oil Board will issue official data on output and stocks on Thursday.
Oil fell sharply on Monday, extending steep losses from the previous session, after elections in France and Greece raised concerns over their ability to carry out further austerity measures and renewed worries about the euro zone debt crisis.
In other vegetable oil markets, the most active US soyoil contract for July lost 0.4 percent in Asian trade while the most active Dalian soyoil September contract fell by 1.1 percent.