MUMBAI (July 8): Malaysian palm oil futures fell 5% on Friday to their lowest level in nine months, following losses in rival soyoil and on sluggish export demand.
Benchmark palm oil futures for September delivery on the Bursa Malaysia Derivatives Exchange closed 5% down at RM2,238 (US$555.3)per tonne, after falling as much as 5.6% earlier in the day to RM2,223, the lowest level since Oct. 9, 2015.
They have lost 5.1% this week, posting their fifth straight weekly fall.
Traded volumes stood at 54,567 lots of 25 tonnes each on Friday evening, above the 2015 average of 44,600.
"Palm oil is catching up with soyoil. For the last two days US soyoil has been correcting. Palm has to correct in the same proportion to remain competitive," said a Kuala Lumpur-based trader.
The Malaysian palm oil market was closed on Wednesday and Thursday for Eid celebrations.
"The sharp fall in the Chinese market has shattered confidence. Traders are closing their long positions," said a dealer.
The September contract for soybean oil, a substitute for palm oil, on the Dalian Commodity Exchange fell 0.47%, while the most actively traded September contract for palm olein declined 1.64%.
China is the world's second largest palm oil consuming country after India.
US soyoil futures fell 3.7% in the previous two sessions.
Higher stockpiles in Malaysia could also dent palm oil prices, forecast a Reuters poll of eight traders, analysts and planters. The survey showed inventories likely rose 7.4% to 1.77 million tonnes in June, while exports slumped 6.4% from May.
Output is seen rising for a fourth consecutive month in line with the seasonal trend to reach 1.51 million tonnes.
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