Palm oil prices fall to 1-week low ahead of export data

JAKARTA: Malaysian palm oil futures extended losses into a third straight session on Thursday, reversing earlier gains as traders positioned themselves ahead of industry data due out in the coming days.

By the close, the benchmark May contract on the Bursa Malaysia Derivatives Exchange had slipped 0.3% to RM2,812 (US$860) per tonne. Prices earlier touched RM2,802, a level not tested seen since March 4.

"We turned negative, which was expected," said a Jakarta-based palm trader.

"The market is quiet," he said, adding that trading was range-bound ahead of export data due in the coming days. "The dry weather factor is still intact but the real impact won't be for another one or two months."

Cargo surveyor Intertek Testing Services will release Malaysia's March 1-15 palm oil export data on March 15, while peer Societe Generale de Surveillance will give out its figures for the same period on March 17.

Benchmark palm prices surged to an 18-month high of RM2,916 per tonne on Tuesday, bolstered by industry stocks data from Malaysia, the world's second-largest grower.

Total traded volume on Thursday stood at 42,436 lots of 25 tonnes, above the average 35,000 lots.

"People are playing wait-and-see," said a trader with a foreign commodities brokerage in Kuala Lumpur. "Yesterday was quite a strong pull-back, and today we have a trading range of 2,800-2,900."

Technicals show a bearish target of RM2,764 ringgit per tonne remains unchanged for Malaysian palm oil, as indicated by a Fibonacci retracement analysis, Reuters market analyst Wang Tao said.

Palm prices could rise above RM3,500 - a level last touched in April 2012 - if the crop-damaging El Nino weather patterns return to plague palm oil plantations, leading analysts have warned. Rising palm prices could cause key consumers to switch to competing edible oils such as soy, sunflower and canola oils for food and fuel use.

In other competing vegetable oil markets, the US soyoil contract for May eased 0.3% in late Asian trade, while the most active September soybean oil contract on the Dalian Commodities Exchange was little-changed.

In the world's top palm producer Indonesia, Pertamina plans to float a third tender to buy palm oil for blending into biodiesel, an official of the state-owned oil firm said, signalling a strong start to the nation's drive to step up usage of the alternative fuel.

In other markets, crude oil was steady around US$108 a barrel as weaker-than-expected Chinese data offset supply disruption worries prompted by the ongoing stand-off between Russia and Western powers over Ukraine. - Reuters