JAKARTA, Sept 30 (Reuters) – Malaysian crude palm oil futures fell to an 18-month low on Tuesday, before recouping some losses at midday, rattled by a tumble in crude oil prices on worries that an economic slowdown will curb demand, traders said.
The benchmark December contract plunged to as low as 1,988 ringgit, its weakest since March 23, 2007, before recovering to 2,059 ringgit a tonne, but still down 3.11 percent.
‘I think it is basically weaker crude oil and soybean oil prices that pushed down palm oil,’ a trader at a Malaysian brokerage said.
The market will be closed on Oct. 1 and 2 for Eid Al-Fitr holidays to mark the end of the Muslim fasting month of Ramadan.
The trader said prices had already bottomed and would likely settle around current levels, unless crude oil dropped further.
NYMEX crude for November delivery settled down $10.52 at $96.37 on Monday on demand concerns after the U.S. House of Representatives failed to approve a $700 billion bailout package for the troubled financial sector.
Crude oil was down $0.26 at $96.09 a barrel in electronic trading at 0445 GMT.
‘We just saw a technical bounce after plunging below 2,000 ringgit but overall the market sentiment remains on the weaker side,’ the head of palm oil futures trading at another Malaysian brokerage said.
The trader said there was also some profit-taking ahead of the holiday period.
The post holiday outlook is also gloomy as the fundamentals may not support a rebound in the market, amid weakening exports and as concerns of defaults may resurface.
‘If prices drop like that, I think the default thing may be brought up again,’ said the trader.
Exports of Malaysian palm oil products for September fell 18.8 percent to 1,209,265 tonnes from 1,488,640 tonnes shipped in August, cargo surveyor Societe Generale de Surveillance said on Tuesday.
‘I think there is a lot of nervousness. Of course most of us are looking at longer term for downside at 1,800-1,900 ringgit levels, but the liquidation pressures brought the market down earlier than we had expected,’ the trader said.
Contracts of other traded months dropped between 41 ringgit and 100 ringgit. The overall volume stood at 9,716 lots of 25 tonnes each.
In the physical trade, Malaysian palm oil stood at 2,080/2,150 ringgit a tonne in south region, and at 2,080/2,130 ringgit a tonne in central region. No trades were done in either region.
Palm, soy and crude oil prices at 0455 GMT
Contract Last Net chg Settle Open High Low Volume
PALM OIL OCT8 2080 -41.00 2121 2024 2080 2023 565
PALM OIL NOV8 2060 -60.00 2120 2014 2062 1995 504
PALM OIL DEC8 2059 -66.00 2125 2029 2059 1988 5606
PALM OIL JAN9 2062 -68.00 2130 2002 2062 1995 1340
CBOT soyoil* 43.64 -1.06 44.70 N/A 44.10 43.44 N/A
NYMEX crude** 95.72 -0.65 96.37 N/A 96.45 95.40 N/A
Palm oil prices in Malaysian ringgit per tonne
* Soy oil in U.S. cents per pound
** Crude in USD per barrel
($1 = 3.445 Malaysian ringgit)
(Writing by Aloysius Bhui; Editing by Ed Davies)
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