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Published: Monday December 31, 2012 MYT 1:46:00 PM
SINGAPORE: Malaysian palm oil futures fell on Monday, weighed by lower exports although losses were limited by expectations that heavy rains in the world's No.2 producer may disrupt production and bring down record high stocks.
Palm oil is on track to notch its worst annual performance since the financial crisis in 2008, losing more than one-fifth thanks to high stocks and a sluggish global growth that has dented edible oil demand.
For the coming year, traders are watching the impact of Malaysia's zero export tax for crude palm oil in January and a stricter import rule for edible oil to be enforced by China, the world's second-largest edible oil buyer.
"Malaysia's new export duty will be tested. There are more concerns on the tax structure because it is now an even playground for both countries (Malaysia and Indonesia)," said a dealer with a foreign commodities brokerage in Malaysia.
"I foresee an even fiercer price competition." Malaysian cargoes are still likely to be cheaper as it set the January export tax rate at zero compared to Indonesia's 7.5 percent.
By the midday break, the benchmark March contract on the Bursa Malaysia Derivatives Exchange had lost 1 percent percent to 2,471 ringgit ($808) per tonne.
Prices hit a high of 2,515 ringgit per tonne on Friday -- a level last seen on Nov. 2, prompted some traders to book profits soon after.
Total traded volumes stood at 18,786 lots of 25 tonnes each, higher than the usual 12,500 lots. Malaysian palm exports during December fell 5.7 percent to 1,568,510 tonnes from 1,663,092 tonnes a month ago, said cargo surveyor Intertek Testing Services on Monday.
Another cargo surveyor Societe Generale de Surveillance will issue exports data for the same period later in the day.
Concerns of heavy rains in Malaysia disrupting supply persisted after the weather office upgraded its warning on Monday from yellow to orange stage for key producing states such as Pahang and Johor.
Brent crude was steady above $110 per barrel on Monday on concerns over the U.S. fiscal crisis that could erode fuel demand.
In competing vegetable oil markets, U.S. soyoil for March delivery rose 0.2 percent in early Asian trade.
The most active May soybean oil contract on the Dalian Commodity Exchange had gained 0.4 percent by the midday break. - Reuters
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