VEGOILS-Global economic fears, slow exports drag on palm oil

KUALA LUMPUR (Dec 20): Malaysian crude palm oil futures dropped on
Tuesday on slowing exports in December and nagging concerns over the
deepening euro zone debt crisis that may curb global economic growth and
commodity demand.

Palm oil is set to extend its 21 percent
decline in 2011 after European finance ministers failed on Monday to
boost resources at the International Monetary Fund by a targeted 200
billion euros, stirring fears that the funds will not be enough to
contain the crisis.

entiment was still quite fragile in Asian
financial markets that managed to claw back a little from the heavy
losses triggered the previous day after the death of North Korea leader
Kim Jong-il raised concerns of regional instability.

In palm oil
markets, the losses were muted as some traders were betting on tighter
supply in the months to come as heavy rains disrupt harvesting. Traders
also focused on hot weather in South America curbing the soy crop that
is crushed into competing soyoil. "

External factors are in
play. It is still a range play for palm oil at 3,005 ringgit to 3,020
ringgit with no direction," said a trader with a local commodities
brokerage. "There is still a conflict of uncertainty over demand versus
heavy rain hitting palm oil output."

By midday, benchmark March
palm oil futures <0#FCPO:> on the Bursa Malaysia Derivatives
Exchange fell 0.5 percent to 3,005 ringgit ($940) per tonne. Traded
volumes stood at 3,572 lots of 25 tonnes each, compared with the usual
12,500 lots as some investors were closing out positions ahead of the
year-end.

Malaysia's weather office has warned of heavy rains in
key oil palm growing state of Johor that accounts for a fifth of
national output. Production is already coming down thanks in part to
seasonally weaker yields and the market expects output to fall more than
18 percent this month.

But exports from Malaysia are also
falling as top buyers slow orders before the year end, giving some
breathing space to palm oil stocks that have started to tighten a
little.

Cargo surveyor Intertek Testing Services reported a 10.1
percent drop in exports to 933,553 tonnes in Dec. 1-20 compared to the
same period a month ago thanks to a decline in orders from mainly India.

Brent crude futures rose above $104 on Tuesday, buoyed by the risk of
supply being disrupted from Central Asian oil producer Kazakhstan, even
as sanctions-hit Iran struggles to maintain its production and Libyan
output is delayed.

U.S. soyoil for January delivery climbed 0.6
percent in Asian trade despite scattered showers in Brazil and Argentina
that will do little to break the dry spell affecting soy crops.

The most active Sept 2012 soyoil contract on China's Dalian commodity
exchange slipped in the wake of palm oil's fall. "The CBOT, Dalian
soybean markets are picking up due to the weather conditions in south
America and southeast Asia," said Huang Zhi Qiang, an analyst with
Shanghai-based Guotai Junan Futures. The (prospects of) rebound is,
however, limited as the global economic climate is still gloomy on the
back of slowing growth in Europe and the US," the analyst added.

hlk, I see many 'golds' in community news, ang tor wong kim, bat chu beh kui liao

477

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