Palm oil prices at lowest since March 19

Prices have lost over 3% this week, palm's dismal export performance in the first 25 days of the month upset market players

Malaysian palm oil futures fell to a more-than-one-week low on Thursday, with investors avoiding risky moves as they await key industry export data due next week.

Fears over Cyprus’s bailout deal damaging the euro zone's fragile recovery roiled global financial and commodity markets, including palm, most of this week and kept investors on edge.

Palm’s dismal export performance in the first 25 days of the month also upset market players and weighed on prices, which have lost more than three per cent this week. Exports fell 7.5 per cent over the period from March 1-25, from a month ago, due to a slowdown in shipments of crude palm oil.

Traders are now waiting for cargo surveyor data on exports for the full month, due next Monday, and industry regulator data on output and inventory, due in mid-April, to gauge palm's direction in the coming months.  

“The market is consolidating and is still unsure — there’s no new factor currently moving this market,” said a trader with a foreign commodities brokerage in Malaysia.

“Everything depends on the production in March. If production this month is lower, then you will see stocks breaking below two million tonnes, for sure,” he added.

The benchmark June contract on the Bursa Malaysia Derivatives Exchange lost 1.5 per cent to 2,411 ringgit ($779) per tonne by the close, which is also its intraday low, a level unseen since March 19.

Total traded volume stood at 43,185 lots of 25 tonnes each, higher than the average 35,000 tonnes seen so far this year.

Technicals for the next quarter were bearish for Malaysian palm oil. Prices are expected to fall to 1,953 ringgit, indicated by its wave pattern and a Fibonacci ratio analysis, said Reuters market analyst Wang Tao.  

Stockpiles in February in Malaysia, the world's No.2 producer, inched down 5 per cent from January to stand at 2.44 million tonnes now. Stocks had hit a record high of 2.63 million tonnes in December as strong production and tepid global demand caused prices to tumble more than 20 per cent in 2012.

Traders say total exports of palm oil products in March need to rise above 1.5 million tonnes for prices to recover, but also stressed that output of the vegetable oil would play a big role.

"It's very critical this month. If the base production is low this month, then for the next few months you'll still have a low base," the Malaysia-based trader said.

In other markets, Brent futures held above $109 a barrel on Thursday on hopes of a revival in demand growth in the world's biggest consumer, the United States, following a surprise fall in product inventories, while worries over Europe's debt problems capped gains.

In vegetable oil markets, U.S. soyoil for May delivery  lost 0.4 percent in late Asian trade. The most-active September soybean oil contract on the Dalian Commodities Exchange closed 0.8 percent lower.