Palm oil slips to 5-year low JAKARTA: Malaysian palm oil futures fell for a seventh-consecutive session to their lowest level in nearly five years on Thursday, with traders citing talk that major consumers in China and India had defaulted on cargoes. Easing crude and competing oilseed prices coupled with astrong ringgit and slowing palm oil exports helped to push palm to its lowest levels since October 2009, with mixed expectationson how long the decline will last. There were rumours of defaults (surrounding) some huge consumers from India and China, said a trader with a local commodities brokerage in Malaysia, declining to give any names. Buyers were allegedly unable to open letters of credit and unable to renegotiate discounts with sellers, the trader said. They would just default on the contract or cancel the contract, he said, adding this had sparked a lot of selling. By the Thursdays close, the benchmark August contract on the Bursa Malaysia Derivatives Exchange had lost0.49 per cent to 2,040 ringgit ($644) per tonne, its lowest level since Oct. 8, 2009. Total traded volume on Thursday stood at 36,389 lots of 25tonnes, above the daily average of 35,000 lots. Prospects of near-record US soybean production also weighed on the market. Right now with other weak and bearish sentiment in the market its very hard to prompt buyers to come in, said a trader with a foreign commodities brokerage in Kuala Lumpur. A lot of things have pulled together. The external marketis very weak. Soy oil is very weak and unfortunately at the same time energy has also been at the lower end of the trading range.Then you have the ringgit with a stellar performance. Palm typically tracks soyoil, a common food and fuel substitute. Soy markets are facing pressure over forecasts of a big soybean crop from top exporter the United States. In competing markets, new-crop soybean prices edged higher as the market recovered from Wednesdays contract low, but gains were capped by forecasts of benign weather in the US Midwest which has reinforced hopes of all-time high production. Brent crude oil fell towards $101 a barrel on Thursday, just above a 14-month low, on plentiful fuel supplies and Chinese economic data pointing to slowing demand. The Malaysian ringgit rose to a near 10-month high last week after data showed stronger-than-expected second quarter economic growth. Traders forecasts for how far palm could fall were mixed. -Reuters
Posted on: Sat, 23 Aug 2014 10:40:29 +0000
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