The tropical oil hit an eight-week low in early trade, extending a 5.3 percent fall from last week as the market was dragged down by weaker crude oil and rival soy prices. The benchmark April contract on the Bursa Malaysia Derivatives Exchange settled down 5 ringgit, or 0.2 percent, at 2,490 ringgit ($745.50), after tumbling as low as 2,439 ringgit, the lowest intraday level since November 24.
Overall volume shot up to 21,638 lots of 25 tonnes each compared to the usual 10,000 lots. Oil fell for the sixth consecutive session to below $78 a barrel on Monday, as renewed concerns over energy demand and the outlook for economic growth prompted investors to sell positions.
"I think the market is undergoing a corrective rebound. Rumours that January -15 (palm oil) production was down double-digits added to the strength," another Malaysian trader said. Stronger exports and a dip in products are key to bringing down palm oil stock in the world's number 2 grower from a 13-month high in December. Palm oil prices normally correlate inversely with palm oil stocks.
Traders are also cautiously awaiting the midweek release of January 1-20 palm oil exports estimates by cargo surveyors for fresh clues on fundamental strength. In the Malaysian physical market, palm oil for January delivery was traded at 2,440-2,470 ringgit per tonne in the southern and central regions.
INDONESIAN PALM TRADES In Indonesia, Jakarta-based PT KBN Nusantara, formerly known as the state marketing centre, sold 3,500 tonnes of palm oil at a top price of 7,053 rupiah ($0.768) per kg, against 7,061 rupiah on Friday. Producers in Medan, home to Indonesia's main palm oil export port of Belawan, did not hold a palm oil tender on Monday. Refiners in Jakarta offered refined, bleached, deodorised (RBD) palm oil, used as cooking oil, at 7,300-7,400 rupiah per kg against 7,600 rupiah on Friday.