KUALA LUMPUR: Malaysian palm oil futures fell for a second straight session on Thursday, as traders adjusted positions after the Malaysian Palm Oil Association (MPOA) estimated a bigger-than-expected rise in March production, which could lead to higher inventories.
The benchmark palm oil contract for June delivery on the Bursa Malaysia Derivatives Exchange fell 89 ringgit, or 1.51%, to 5,823 ringgit ($1,381.00) a tonne.
Investors are booking profits on expectation that demand will slow down as destination markets grapple with deep negative margins due to high prices, said Anilkumar Bagani, research head of Mumbai-based vegetable oils broker Sunvin Group.
The MPOA forecast a 19% jump in March production to 1.35 million tonnes, higher than market estimates, and may put further selling pressure if stocks build, Bagani said.
Palm ends little changed as traders assess exports, output prospects
In comparison, a Reuters poll had forecast on Monday that March production would rise 16.4% from the month before to 1.32 million tonnes, but it would be offset by stronger exports. End-month stocks were seen 0.5% higher at 1.53 million tonnes.
The Malaysian Palm Oil Board is expected to release official data on April 11.
In western Ukraine, some 1,100 train wagons carrying vegetable oils, grains and other commodities are stuck near the main rail border crossing with Poland, unable to transport their cargo abroad.
Russia’s invasion of Ukraine has heightened concerns about global food security, sending prices of global grain, edible oils, fertilizer and fuel soaring.
Oil prices rose from a three-week low touched in the previous session after consuming nations announced a huge release of oil from emergency reserves, with worries over tight supply still clouding the market outlook.
Stronger crude oil futures make palm a more attractive option for biodiesel feedstock.
Dalian’s most-active soyoil contract rose 0.8%, while its palm oil contract gained 0.1%. Soyoil prices on the Chicago Board of Trade were up 0.7%.
Comments
Comments are closed for this article.