Palm dips tracking weaker soyoil; demand seen supporting later

KUALA LUMPUR: Malaysian palm oil futures fell in early trade on Thursday, tracking weaker soyoil on the Chicago Board of Trade, but rising export demand limited the losses and could even help the market gain later in the session, traders said.

The benchmark palm oil contract for August delivery on the Bursa Malaysia Derivatives Exchange was down 0.1 percent at 2,640 ringgit ($610.40) a tonne at the midday break.

Traded volumes stood at 11,919 lots of 25 tonnes each at noon.

"Most commodities are down this morning, including US soyoil, due to the negative US Dow Jones index," said a Kuala Lumpur-based futures trader. The Dow had recorded its biggest one-day fall since September on reports that US President Donald Trump tried to interfere with a federal investigation.

However, rising demand is seen limiting palm's losses, as higher export shipments ahead of Ramadan are seen supporting the market.

"Exports will be good, there is some tightness as people chase oil delivery. There is congestion at the ports, which is a sign of heavy shipments," said another physical trader.

"Production is also not coming in, resulting in slow deliveries of crude palm oil."

The upcoming fasting month of Ramadan, which takes place at the end of May this year, sees Muslims break day-long fasts with communal feasting, leading to higher palm oil usage for cooking.

Malaysian shipments of palm oil products rose 7-8.9 percent in the first half of May versus the same period last month, according to cargo surveyor data.

Palm oil August contract is expected to test a resistance at 2,660 ringgit per tonne, a break above which could lead to a gain to the next resistance at 2,691 ringgit, according to Wang Tao, a Reuters market analyst for commodities and energy technicals.

In other related vegetable oils, soybean oil on the Chicago Board of Trade was down 0.9 percent, while the September soybean oil contract on the Dalian Commodity Exchange also fell 0.2 percent.