KUALA LUMPUR: Malaysian crude palm oil futures fell as much as 4.3 per cent to a new 10-month low on Monday, as faltering energy and vegetable oil markets encouraged a sell-off, despite good export data from cargo surveyors.

Vegetable oil prices, which have slid more than 12 per cent this year, may drop even further on a cocktail of weaker crude oil prices, bumper crops for soybeans and palm oil. The benchmark October contract on the Bursa Malaysia Derivatives Exchange fell as much as 120 ringgit to 2,659 ringgit a tonne ($802), a level not seen since October 11, 2007.

“The 2,500 ringgit level is dangerously looming ahead,” said a trader with a foreign commodities broker. He added: “In terms of fundamentals, there may appear to be stronger exports and a slow reduction in stocks but this is overwhelmed by strong influence of weak crude oil and soyoil.”

Oil rebounded more than $1 on Monday on supply disruption fears, clawing back some gains from last week’s sharp declines but soybean complexes at Chicago Board of Trade and Dalian Commodity Exchange continued to falter.

The September soyoil contract fell 0.8 per cent in CBOT, amid expectations of better crop reports from the USDA on Tuesday. The most-active January 2009 soyoil contract in Dalian fell by its daily limit. Good key data on palm oil exports and stocks were largely ignored by the market, although some analysts pointed out a slowdown in stocks was imminent.

“Towards the fourth quarter, production would have softened because the oil palm trees would have undergone considerable stress after months of high yields,” said James Ratnam, an analyst with TA Securities. Malaysia’s crude palm oil stocks fell 2.8 per cent to 1,977,060 tonnes in July, from a revised 2,033,914 tonnes in June, official crop agency Malaysian Palm Oil Board said on Monday. The decline in stocks was more than the 2.2 per cent fall estimated in a poll.

But the strength in exports will not run down stocks so quickly, other analysts and traders said. Cargo surveyor Intertek Testing Services reported on Monday exports of Malaysian palm oil products for August 1-10 rose 14.9 per cent to 407,922 tonnes while Societe Generale de Surveillance saw an increase 23.2 per cent to 401,800 tonnes. “It’s not a big deal because exports in the same period in July were so bad,” a dealer said.

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