Malaysian palm oil futures reversed earlier gains to fall at the close of trade on Friday, tracking related edible oils on China's Dalian Commodity Exchange which erased some gains. The benchmark palm oil contract for November delivery on the Bursa Malaysia Derivatives Exchange was last down 0.4% at 2,192 ringgit ($524.90) per tonne in the evening, charting a second day of losses after seven previous session of wins.
The market, however, is up 0.6% for the week for a second straight week of gains. Palm oil may test a support at 2,160 ringgit per tonne, a break below which could cause a fall to 2,113 ringgit, said Wang Tao, a Reuters market analyst for commodities and energy technicals. "Palm opened higher today tracking initial bullish momentum in US soyabean oil on the Chicago Board of Trade and Dalian Commodity Exchange's related oils," said Anilkumar Bagani, research head of Sunvin Group, a Mumbai-based vegetable oil brokerage.
"However, the market could not hold gains and started to trade in negative territory as with similar losses seen in Chinese commodity futures," he said, adding that palm is also seeing a correction after an earlier streak of gains. Meanwhile, top palm producer Indonesia said on Friday it wants to develop 100% palm-based biodiesel, as part of efforts to increase domestic consumption and reduce palm stockpiles.
Palm oil is used as feedstock to make biodiesel which is a fuel substitute. In other related edible oils, US soyaoil futures on the CBOT gained 8%, while the September soyaoil contract on the Dalian exchange rose 0.3%. The Dalian September palm oil contract fell 0.6%. Palm oil prices are also affected by movements in related oils that compete in the global vegetable oils market.
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