Palmetto slips by more than 1% due to market caution and anticipated stock building-up

Malaysian palm futures continued to fall for the second session in a row on Monday. This was due to a cautious investor sentiment, and an expectation of increasing inventories with increased production.

By midday, the benchmark palm oil contract on Bursa Malaysia's Derivatives exchange for December delivery had fallen 78 ringgit or 1.72% to 4,466 Ringgit ($1,057.79).

David Ng is a proprietary trader with Kuala Lumpur's trading firm Iceberg X Sdn. Bhd. He said that the lower prices of crude palm oil were due to the market's risk-off attitude and expectation of higher stock levels in coming weeks, amid increased production.

Dalian's palm oil contract, which is the most active contract, fell by 1.77%. Chicago Board of Trade soyoil prices were up by 0.32%.

As palm oil competes to gain a share in the global vegetable oil market, it tracks the price changes of competing edible oils.

Investors hoped that potential talks between U.S. President Barack Obama and Chinese President Xi Jinping could ease tensions between these two world's largest economies.

Palm oil is a better option as a biodiesel feedstock because crude oil futures are stronger.

The palm ringgit, the currency of trade for palm, has remained unchanged in relation to the U.S. dollar.

Exports of Malaysian Palm Oil Products for October 1-10 increased between 9.9% to 19.4% in comparison with the same period one month earlier.

Due to increased global production, the Malaysian government expects that crude palm oil prices will range between 3,900 Ringgit ($925.05), and 4,100 Ringgit per metric tonne next year.

Technical analyst Wang Tao stated that palm oil could stabilise at around 4,530 ringgit a metric ton, and then resume its upward trend towards 4,604 ringsgit.

(source: Reuters)