Malaysia palm futures slump on default fears
Malaysian crude palm oil futures fell 7.3 percent to a one-week low on Tuesday as fears of defaults by Chinese, Indian and other buyers amid rising supply and falling prices.
A broad decline in commodities, including crude oil and soyoil, added to the pressure on palm oil, traders said.
The benchmark November palm oil contract fell 191 ringgit to finish at 2,409 ringgit ($710) per tonne.
Buyers have defaulted on, or are renegotiating the price on over 1.2mmt of palm oil contracts according to some sources with most of the defaults coming from China, India, Pakistan and Bangladesh.
When the market peaked lots of business was done around $1,250/tonne CIF west coast India, but prices are now down to around $800/tonne.
Existing Malaysian and Indonesian stocks are said to be huge at around 4.5mmt. Indonesia's output this year is likely to be 2.3mmt while Malaysia's is expected to be 1.8mmt.
A broad decline in commodities, including crude oil and soyoil, added to the pressure on palm oil, traders said.
The benchmark November palm oil contract fell 191 ringgit to finish at 2,409 ringgit ($710) per tonne.
Buyers have defaulted on, or are renegotiating the price on over 1.2mmt of palm oil contracts according to some sources with most of the defaults coming from China, India, Pakistan and Bangladesh.
When the market peaked lots of business was done around $1,250/tonne CIF west coast India, but prices are now down to around $800/tonne.
Existing Malaysian and Indonesian stocks are said to be huge at around 4.5mmt. Indonesia's output this year is likely to be 2.3mmt while Malaysia's is expected to be 1.8mmt.
