Malaysian palm oil futures slipped to a more than nine-month low on Monday, tracking heavy losses in overseas soy and crude oil markets, while a firmer ringgit further dampened buying interest in the tropical oil. Palm, which typically tracks soyoil, was pressured alongside the rival edible oil after the US Department of Agriculture (USDA) forecast abundant global supplies of soybeans in its monthly report issued on Friday.
The USDA now expects the US soybean harvest to grow by 4.5 percent to a record 3.8 billion bushels, topping analysts' expectations by 0.7 percent. "Palm's fundamentals by itself are still strong. It's all external pressure - energy prices are easing, and soy prices took a hit because of the USDA report," said a trader with a foreign commodities brokerage in Kuala Lumpur.
Bigger supplies of soybeans for crushing could cause soyoil prices to further ease, narrowing palm's discount and potentially shifting food and fuel demand away from the tropical oil. The benchmark September contract on the Bursa Malaysia Derivatives Exchange fell 2.1 percent to a more than nine-month low of 2,298 ringgit ($723) per tonne by Monday's close. Prices traded in a range of 2,292 to 2,331 ringgit.
Total traded volume stood at 53,721 lots of 25 tonnes, much higher than the average 35,000 lots. "Buyers' interest should be thin, awaiting support at 2,280-2,320 ringgit. Sellers should stay alert as rebounds due to profit-taking are very likely," said second Kuala Lumpur-based trader.
Technicals, however, were bearish. Malaysian palm is expected to fall more to 2,298 ringgit per tonne, as it has broken below support at 2,328 ringgit, said Reuters market analyst Wang Tao. The Malaysian ringgit advanced 0.19 percent to 3.1800 per dollar late Monday, making the ringgit-priced feedstock more expensive for overseas buyers and refiners.
"The ringgit firmed slightly, that also put additional pressure on the market," the first trader added. The US soyoil contract fell 0.6 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodities Exchange lost 1.3 percent. In other markets, Brent crude oil slipped towards $106 a barrel on Monday, its lowest for three months, depressed by signs of improving supply from key producers and weak demand in some consuming centres.
