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Morning markets: palm's solo act a bearish one

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Palm oil didn't use the closure of US markets as an opportunity to lick its wounds, shedding a further 2% in Kuala Lumpur as easier external markets deprived investors of reasons to hold long positions.

While the closure of US markets for Martin Luther King Day allowed Chicago crops a breather after a dismal week, palm oil remained under the cosh, dropping to its lowest level for nearly nine weeks.

At its low point on Monday it stood 10.5% down a high hit two weeks ago, before data showing a jump in Malaysian stocks, and bearish US estimate changes to many crops, sapped investor sentiment.

Optimism has been further dented by easier prices of oil – palm oil is used in part for making biodiesel – which continued to fall, standing 0.2% lower at $77.82 a barrel at 07:40 GMT.

Declining prices of soyoil, a major rival in the vegetable oil market, on the Dalian exchange in China – the biggest importer of vegetable oils – have also hurt. Dalian soyoil for March was a further 0.4% lower.

'Heading south'

"Sentiment is bearish so the market is heading in only one direction unless external markets start to rebound," a Kuala Lumpur trader told Reuters, the news agency.

"For sure the market is heading south," another said. "Technically, we have seen a reversed trend to a downtrend and fundamental is still weak."

Palm oil for April, the benchmark contract, stood 1.1% lower at 2,467 ringgit a tonne, after touching 2,439 ringgit earlier.

By Agrimoney.com

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