KUALA LUMPUR (Nov 30): Malaysian palm futures dropped in early trade on Wednesday, pointing toward a second session of decline, as traders sold on weaker market sentiment fuelled by slowing export demand and weak commodities markets in China.
Palm oil had previously charted six consecutive sessions of gains, hitting a four-year high last Thursday.
Benchmark palm oil futures for February delivery on the Bursa Malaysia Derivatives Exchange fell 0.8% to 3,026 ringgit (US$678) a tonne at the midday break.
Traded volumes stood at 20,560 lots of 25 tonnes each.
"Demand is still not improving while production has also not shown signs of improvement," said a trader in Kuala Lumpur, with investors remaining on standby for any fresh trading cues.
Palm oil shipments from Malaysia, the world's No.2 producer of the tropical oil, fell 10.6% for the full month of November from the previous month, according to data from cargo surveyor Intertek Testing Services.
Another trader said weaker Chinese commodities also contributed to bearish sentiment, as Chinese metals futures saw sharp falls on Wednesday.
Related vegetable oils on China's Dalian Commodity Exchange also registered losses. The May soybean oil contract on the Dalian Commodity Exchange dropped 1.4%, while the May contract of palm olein on the Dalian Commodity Exchange was down 2.4%.
Chinese commodities have fallen in recent weeks, as regulators try to cool price rallies by tightening regulations.
In October, Chinese regulators introduced more stringent rules on structured products, which had pumped billions of dollars into the commodity futures market.
Technical analysis shows palm oil is biased to break a support at 3,027 ringgit per tonne, before falling to the Nov 24 low of 2,983 ringgit, according to Reuters market analyst for commodities and energy technicals Wang Tao.
In related vegetable oils, the January soybean oil contract on the CBOT fell 0.1%.
Palm, soy and crude oil prices at 0515 GMT
| Contract | Month | Last | Change | Low | High | Volume |
| MY PALM OIL | DEC6 | 3046 | -14.00 | 3035 | 3060 | 91 |
| MY PALM OIL | JAN7 | 3037 | -22.00 | 3026 | 3070 | 571 |
| MY PALM OIL | FEB7 | 3026 | -24.00 | 3017 | 3067 | 11222 |
| CHINA PALM OLEIN | MAY7 | 6134 | -150.00 | 6114 | 6266 | 827438 |
| CHINA SOYOIL | MAY7 | 7064 | -100.00 | 7036 | 7214 | 844692 |
| CBOT SOY OIL | JAN7 | 36.6 | +0.00 | 36.52 | 37.1 | 11946 |
| INDIA PALM OIL | NOV6 | 553.40 | -0.10 | 553.20 | 553.5 | 19 |
| INDIA SOYOIL | DEC6 | 713.5 | -1.40 | 712.55 | 714.5 | 1940 |
| NYMEX CRUDE | JAN7 | 45.52 | +0.29 | 45.22 | 45.61 | 24352 |
Palm oil prices in Malaysian ringgit per tonne
CBOT soy oil in U.S. 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 U.S. dollars per barrel
(US$1 = 4.4640 ringgit)
(US$1 = 68.5900 Indian rupees)
(US$1 = 6.8851 Chinese yuan)