Palm oil in biggest weekly drop in 1-1/2 years to near five-year low

KUALA LUMPUR, Aug 17 (Reuters): Malaysian palm oil futures tumbled to their lowest in nearly five years on Friday to record their biggest weekly fall since March 2013, under pressure from a surge in the ringgit as well as concerns over food and fuel demand.
The benchmark October contract on the Bursa Malaysia Derivatives Exchange slid to 2,085 ringgit in late trade, an Oct. 9, 2009 low, before ending 1.8 per cent down at 2,094 ringgit ($664) per tonne on Friday.
Market players said palm prices were weighed down by worries of slackening demand, as well as a government crackdown in China which put pressure Chinese commodity markets.  "Prices plunged at close, on signs of poor demand, stronger ringgit and on rumours about Chinese government cracking down on agencies and people who avoid the value-added-tax on consumption tax," said a trader with a commodities brokerage in Malaysia.  The most active January soybean oil contract on the Dalian Commodities Exchange hit a new contract low of 6,028 yuan, shedding 2.0 per cent in late Asian trade, while the U.S.  soyoil contract for December fell 0.5 per cent.  
Prices of palm oil, the world's most traded vegetable oil, are down 6.2 per cent this week, notching their biggest weekly drop since March 2013 - dragged down by projections of abundant supplies of soybeans.
"Record corn and soybean production, coupled with anticipated peak production (for palm) locally are limiting attempts for a recovery," the trader added.
Palm typically tracks soyoil, a rival edible oil and common food and fuel substitute. Soy markets are facing pressure over forecasts of a bountiful soybean crop from top exporter the United States.
Total traded volume stood at 43,566 lots of 25 tonnes on Friday, above the average 35,000 lots.
Technicals earlier showed that Malaysian palm oil may have found a support at 2,124 ringgit per tonne and may hover around this level or rebound to 2,172 ringgit, said Reuters market analyst Wang Tao.       
The Malaysian ringgit jumped to a near 10-month high on Friday following data that showed stronger-than-expected second-quarter economic growth in the Southeast Asian country, rising as much as 0.8 per cent to 3.1540 per dollar. "The ringgit caught many people by surprise, strengthening by 0.8 per cent - that's a lot for day-to-day trade," another Kuala Lumpur-based trader said.