KUALA LUMPUR: Palm oil futures hit a four-month low – falling for an eighth successive session – as a rise in Malaysian export prices added to pressure from weakness in markets for rival vegetable oils.
Palm oil for August delivery touched 2,437 ringgit a tonne in Kuala Lumpur, a drop of 1.8% and the lowest level for a spot contract since January, falling in the process below its 200-day moving average on a continuous chart for the first time in nine months.
The contract recovered some ground to end at 2,468 ringgit a tonne, a decline of 0.5% on the day, and a four-month closing low.
The decline followed a circular from the Malaysian Palm Oil Board showing that the country will in July impose a tax of 6.0% on palm exports, up from a levy rate of 5.5% this month.
Pressure also came from weakness in prices of rival vegetable oil soyoil, which stood at 32.24 cents a pound in early deals in Chicago, a drop of 0.9% on the day, and taking its decline so far this week to 1.6%.
“The premium of soyoil over crude palm oil is still quite narrow,” Ed Hugo, analyst at VSA Capital, said on the sidelines of the Agrimoney Investment Forum in London.
“This makes palm oil vulnerable to any sign of weakness in the soyoil market.”
A strong start to the year for Malaysian palm oil exports has slowed since April under pressure from higher prices and the reintroduction that month of an export tax, after nearly a year of levy-free shipments.
Kuala Lumpur futures touched a two-year high of 2,793 ringgit a tonne in late March.
Malaysian Palm Oil Board data on Friday showed Malaysian exports at 1.28m tonnes last month, a drop of 21% year on year, albeit showing a 9.3% recovery from the April figure.
And prospects look poor for much of a recovery this month.
Shipments so far in June are running 3.4% down on those in the first half of last month, Societe Generale de Surveillance said on Wednesday, with rival cargo surveyor Intertek Testing Services seeing an increase of 0.5%.
Data from India show imports of vegetable oils down 27% year on year in May – the first drop in volumes since June 2014.
