“With demand and the near-term export data not so strong, the worry is that the narrowing of the discount may reduce the attractiveness of palm as an edible oil versus soybean oil,” said Ivy Ng, an analyst at CIMB Investment Bank Bhd.

Unilever, the second-biggest consumer goods company, sees low- to mid-single digit commodity-cost inflation in 2013, down from high single-digit increase across food, home and personal care products in 2012, according to the company in January.

Lower prices may further cut global food costs tracked by the United Nations' Food & Agriculture Organization. The Rome-based group's food price index is 11 percent below the record reached in February 2011, with its oils and fat index dropping 10 percent in the past year.

Eoin Treacy's view Palm oil is an increasingly important food commodity as the ranks of the middle classes increase. Its use in the biodiesel sector contributed to demand outstripping supply by a wide margin in the early 2000s and prices tested the MYR4000 area in 2008 and 2011. Some of the pollution problems so widely reported in Hong Kong and Singapore have been as a result of vast swathes of virgin rainforest being burned down to make way for plantations across Indonesia and Malaysia. This represented a major supply response and prices have almost halved since 2011. Palm Oil ranged mostly above MYR2200 from October and broke lower today. A countermanding upward dynamic would be required to question potential for additional downside.

While palm oil is one of the weaker commodities, the performance of the Continuous Commodity Index is also worthy of mention. The Index had become quite oversold when it found support in late June. It has since rallied to test the medium-term progression of lower rally highs and encountered resistance on Tuesday near 520. It will need to find support above the late June low near 500 and sustain a move 520 on a subsequent rally to confirm a return to demand dominance and break the medium-term downtrend.

The decline in commodity prices which has been most keenly felt in the industrial metal sector has been a welcome development for consumers while the mining sector has come under particular pressure. As an illustration of the performance of commodity producers versus consumers the FTSE350 Mining Index / FTSE Food Producers and Processors ratio is interesting. It has been trending lower since early 2011 and dropped below the 2008 low last month. At such a deeply oversold level, the potential for an additional reversionary rally has increased but a break in the progression of lower rally highs would be required to question the medium-term underperformance of the mining sector.