May 30, 2012 / 6:32 AM / 6 years ago

VEGOILS-Palm falls over 2 pct on euro zone debt woes

* Euro zone debt issues continue to dominate sentiment
    * Ramadan demand boost expected by traders

 (Recasts, updates throughout, adds detail/comment)	
    By Michael Taylor	
    JAKARTA, May 30 (Reuters) - Malaysian palm oil futures snapped a four-day
rally on Wednesday, falling more than 2 percent as euro zone debt jitters
weighed on prices, although losses were capped by expected demand ahead of the
Muslim fasting month of Ramadan in July.	
    European shares slipped and the euro touched a 23-month low on Wednesday as
investors worried that Spain's banking problems would push its borrowing costs
to unsustainable levels and after China signalled it is not planning a large
stimulus package. 	
    The benchmark August palm oil futures on the Bursa Malaysia
Derivatives Exchange ended 2.1 percent lower at 3,111 Malaysian ringgit ($990)
per tonne. Prices, which earlier hit a low at 3,106 ringgit, have slipped more
than 10 percent this month.	
    Traded volumes stood at 17,601 lots of 25 tonnes each, compared with
Tuesday's total at 15,689 lots.	
    Palm oil is "taking its cue from macro uncertainties," said a Kuala
Lumpur-based trader. "If Europe fail to provide the much needed simulation, it
will have more downside."	
    Last week, palm prices were weighed down as no significant breakthrough was
made in resolving Europe's debt crisis, sending the benchmark down to its lowest
level this year at 2,993 ringgit per tonne.	
    Palm oil will drop to 3,069 ringgit per tonne, driven by a wave (5), the
fifth wave of a five-wave cycle, said Reuters market analyst Wang Tao based on
technical analysis. 	
    "The market fundamentals are still bullish because of slower production and
exports not being too bad, but outside factors really scared buyers," said a
Jakarta-based buyer.	
    But highlighting how jittery investors are, benchmark palm prices rose to
their highest peak in almost two weeks earlier this week as investors keep a
close eye on weather conditions in the United States.	
    Soybeans rose for a fourth straight session, supported by dryness in parts
of the U.S. Midwest, tight supplies from South America and strong Chinese
    "Palm oil today is down a bit," a second Kuala Lumpur-based trader said.
"With the euro zone crisis dragging ... everything is uncertain."	
    "So far so good," he added on the U.S. weather patterns. "But it's only the
initial part of the planting season."	
    Also helping to boost palm prices, according to traders, was a rise in
demand from India and Pakistan for Ramadan, where fasting in the day is followed
by feasting in the evening.	
    "We are moving into the fasting season, where demand is going to come in and
pick up," the second trader added.	
    In other vegetable oil markets, the most active Dalian soyoil September
contract eased slightly.	
    Brent crude oil fell below $106 per barrel as fears intensified about the
future of Spain's banks, while China signalled it was not planning a large
stimulus package, dimming demand prospects. 	
    Palm, soy and crude oil prices at 1008 GMT : 	
  Contract        Month    Last   Change     Low    High  Volume                                                     
  M'ASIA PALM OIL  JUN2    3100   -40.00    3098    3100      30                                                     
  M'ASIA PALM OIL  JUL2    3109   -61.00    3109    3161    3342                                                     
  M'ASIA PALM OIL  AUG2    3111   -67.00    3106    3160   17601                                                     
  M'ASIA PALM OIL  SEP2    3105   -67.00    3105    3156    3692                                                     
  DALIAN SOY OIL   JAN3    9304   -32.00    9288    9350  339358                                                     
  CBOT SOY OIL     JUL2   49.85    -0.32   49.85   50.36    6336                                                     
  NYMEX CRUDE      JUL2   89.61    -1.15   89.55   90.92   22007                                                     
   Palm oil prices in Malaysian ringgit per tonne   	
   CBOT soy oil in U.S. cents per pound   	
   Dalian soy oil and RBD palm olein in Chinese yuan per tonne   	
   Crude in U.S. dollars per barrel	
    ($1 = 3.1500 Malaysian ringgit)	
 (Editing by Ed Lane)

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