KL palm oil drops on domestic stock fears

KL palm oil drops on domestic stock fears

KUALA LUMPUR (Reuters): Malaysian palm oil futures fell sharply to close at fresh 6-1/2 year lows on Monday on commission house selling and liquidation by players worried about growing domestic stocks.

Traders said overnight losses in Chicago soyoil futures also prompted liquidation, while technical selling emerged after prices broke through the 950-ringgit-a-ton support level.

The benchmark third-month December futures contract ended down 44 ringgit at 927 ringgit (US$243.95) a ton, the day's low. It was the lowest level since March 1994.

Volume was heavy at 2,729 lots.

"People are worried about stocks as we are expecting big production in the coming months. But I think the fall was a bit overdone and we may see some correction," said one trader.

Cargo surveyors Intertech Testing Services and Societe Generale de Surveillance Malaysia Sdn Bhd are scheduled to release export data for September 1-20 on Wednesday.

Malaysia's palm oil stocks at the end of August stood at 1.19 million tons, up from 1.07 million tons at end-July.

Physical prices also weakened due to a lack of demand for refined products coupled with ample supplies.

Sept (south) crude palm oil was offered at 880 ringgit a ton against bids of 870, and trade was reported at 900 to 880.

Oct (south) was offered at 895 ringgit against bids of 890, with trade done at 930 to 890.

Among refined products, Oct RBD palm oil was offered at $252.50 a ton FOB, Nov at $257.50 and Dec at $262.50.

There were offers for Oct RBD palm olein at $272.50, Nov at $277.50 and Dec at $282.50.

Oct RBD palm stearin was offered at $190 and Oct palm fatty acid distillate at $160.