14 Oct 2008
JAKARTA, Oct 13 (Reuters) - Malaysian palm oil futures fell more than 1 percent on Monday on weak rival soyoil and lingering fears of a global recession that will slow demand. A government move to raise the annual export quota for crude palm oil by 50 percent, in an attempt to ease surging inventory that has hurt prices, lent some support to the market, dealers said.
The benchmark December contract <KPOc3> on the Bursa Malaysia Derivatives Exchange edged down 23 ringgit, or 1.3 percent, at 1,750 ringgit ($499) a tonne.
"With soybean oil still minus and crude oil below $80, the market tended to ease today," said a dealer in a local brokerage firm.
"The bearishness is not over yet. Investors are still waiting for the 1,500-ringgit level," the dealer said, adding palm oil would hit that level when crude oil touched $50-$60 per barrel
Contracts for other traded months fell between 13 and 28 ringgit. Overall volume stood at 5,718 lots of 25 tonnes each.
Chin said the government also hopes to push for a biofuel mandate to require the replacement of five percent of domestic diesel consumption with palm-based biofuel.
Prices of the tropical oil have tumbled more than 60 percent from their high earlier this year on a combination of swelling stocks and slowing demand heightened by a weakening global economy.
"It is supportive on the market but not much. We have financial turmoil. The quota does not mean anything because demand will be slack generally," said another dealer at a foreign brokerage firm.
Oil climbed more than $2 on Monday, recouping part of Friday's 10 percent dive as European leaders took bolder steps to pull the banking sector out of crisis, but some gains faded as traders curbed their initial enthusiasm. [O/R]
In the physical market, crude palm oil for October delivery stood at 1,820/1,880 in south region. Trades were done at 1,800-1,820 ringgit a tonne.
Palm, soy and crude oil prices at 0551 GMT
Contract Last Net chg Settle Open High Low olume
PALM OIL OCT8 1820 -19.00 1839 1820 1820 1816 4
PALM OIL NOV8 1780 -13.00 1793 1790 1815 1780 745
PALM OIL DEC8 1750 -23.00 1773 1750 1783 1742 2985
PALM OIL JAN9 1746 -17.00 1763 1730 1775 1730 1822
CBOT soyoil* 36.50 + 0.00 36.50 N/A 0.00 0.00 N/A
NYMEX crude** 79.91 + 2.21 77.70 N/A 81.07 79.45 N/A
Palm oil prices in Malaysian ringgit per tonne
* Soy oil in U.S. cents per pound
** Crude in USD per barrel
Source : thomsonreuters
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