Palm drops for third straight day tracking weak soyoil

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KUALA LUMPUR (Aug 13): Malaysian palm oil futures declined in the first half of trade on Monday, and were in line for a third straight day of losses, tracking weakness in soyoil on the Chicago Board of Trade.

The benchmark palm oil contract for October delivery on the Bursa Malaysia Derivatives Exchange was down 0.8% at RM2,225 (US$544.01) a tonne at noon.

It earlier fell as much as 1.6% to RM2,206, its lowest levels since Aug 7.

Trading volumes stood at 12,810 lots of 25 tonnes each at the midday break.

"Palm is down on soyoil," said a Kuala Lumpur-based futures trader, referring to soyoil's sharp declines on Friday. Soyoil and soybean on the US Chicago Board of Trade fell on market concern that a trade dispute between Washington and Beijing would cause US stockpiles, already projected at a record high, to rise even further.

The US Agriculture Department on Friday had raised its outlook for domestic corn and soybean harvests by a more than expected amount due to good weather during key phases of development.

The trader also added that palm oil could remain bearish in the medium term, citing rising production and end-stocks.

"August exports are also not going to be good, as buyers would wait for the 0% crude palm oil export tax rate to begin in September," he added.

Malaysia lowered its export tax on crude palm oil for September to 0%, down from 4.5% in August, the Malaysian Palm Oil Board (MPOB) said on Monday citing the national customs department.

The MPOB had reported on Friday that July end-stocks in Malaysia rose 1.3% to 2.21 million tonnes in a second month of gains, while exports grew 6.8% from June to 1.21 million tonnes.

Meanwhile, production in July rose 12.8% from the previous month to 1.5 million tonnes and is set to further climb, in line with seasonal trend until its peak towards the last quarter of the year.

The Chicago December soybean oil contract, down 1.6% on Friday, fell another 0.4% on Monday.

The January soybean oil contract on China's Dalian Commodity Exchange dropped 1%, while the Dalian January palm oil contract was also down 0.9%.

Palm oil prices are impacted by movements of other edible oils, as they compete for a share in the global vegetable oils market.

Palm, soy and crude oil prices at 0553 GMT

Contract          Month    Last  Change     Low    High  Volume
MY PALM OIL       AUG8     2150  -56.00    2150    2150      10
MY PALM OIL       SEP8     2211  -14.00    2195    2211     495
MY PALM OIL       OCT8     2225  -17.00    2206    2227    6609
CHINA PALM OLEIN  JAN9     4910  -46.00    4850    4978  246308
CHINA SOYOIL      JAN9     5836  -58.00    5758    5908  339186
CBOT SOY OIL      DEC8    28.31   +0.00   28.24   28.45    6505
INDIA PALM OIL    AUG8   596.20   -1.60  595.50     597     129
INDIA SOYOIL      AUG8    735.2   -2.10   734.1   736.5     340
NYMEX CRUDE       SEP8    67.53   -0.10   67.48   67.95   31062

Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in US cents per pound
Dalian soy oil and RBD palm olein in Chinese yuan per tonne
India soy oil in Indian rupee per 10 kg
Crude in US dollars per barrel

(US$1 = RM4.0900)
(US$1 = 69.4500 Indian rupees)
(US$1 = 6.8745 Chinese yuan)