By Rajendra Jadhav
MUMBAI, Aug 17 (Reuters) – Malaysian palm oil futures extended last week’s losses on Monday to trade near the lowest in 11-months, hurt by rising stockpiles in top producing countries and weaker prices for rival soyoil.
By the midday break, the benchmark palm oil contract for November on the Bursa Malaysia Derivatives Exchange was down 0.98 percent at 2,027 Malaysian ringgit a tonne. The contract fell as low as 1,958 ringgit last week, the lowest level since Sept. 3, 2014.
Traded volume stood at 23,336 lots of 25 tonnes each, significantly above the roughly 13,500 lots usually traded by midday.
The ringgit, which has been the worst performing emerging Asian currency so far in 2015, restricted the downside as benchmark palm is priced in the local currency, traders said.
The local currency weakened more than 1 percent on Monday to stay near its 1998 pre-peg lows on an extended selloff in local stocks and bonds amid fears of capital outflows.
“Even after the price drop, Malaysia and Indonesia failed to boost palm oil exports. Stocks are likely to rise at the end of this month in both the countries,” said a Mumbai-based vegetable oil dealer.
In top producing Indonesia, palm and lauric oil exports fell 8 percent in July from a month earlier, an industry body said last week.
Data released last week showed a build-up in Malaysia’s July palm oil stocks to 2.27 million tonnes due to higher production and a slowdown in demand after the Muslim holy month of Ramadan.
Palm futures fell 0.8 percent last week, extending losses to a seventh consecutive week.
“Production has been rising, but demand is weak. Devaluation of China’s yuan has raised concerns over the demand,” said a Kuala Lumpur-based dealer.
Among other vegetable oils, the U.S. September soyoil contract was down 1 percent in late Asian trade, while the most active soybean oil contract on the Dalian Commodity Exchange dipped 0.5 percent.
Crude oil prices fell to near six-year lows on Monday as Japan’s economy contracted and producers in the United States added drilling rigs for a fourth straight week despite a recent rout in prices.
Wang Tao, a Reuters market analyst for commodities technicals, said palm oil faces a resistance at 2,052 ringgit per tonne and may retrace to a support at 2,017 ringgit.
(Reporting by Rajendra Jadhav; Editing by Richard Pullin)
